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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ----- to -----
Commission file number 0-13163
Acxiom Corporation
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 71-0581897
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
P.O. Box 8180, 1 Information Way,
Little Rock, Arkansas 72203
(Address of Principal Executive Offices) (Zip Code)
(501) 342-1000
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No
The number of shares of Common Stock, $ 0.10 par value per share, outstanding as of November 4, 2002 was
89,207,662.
ACXIOM CORPORATION AND SUBSIDIARIES
INDEX
REPORT ON FORM 10-Q
SEPTEMBER 30, 2002
Page No.
Part I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of September 30, 2002 and March
31, 2002 (Unaudited) 2
Condensed Consolidated Statements of Operations for the Three Months Ended
September 30, 2002 and 2001 (Unaudited)
3
Condensed Consolidated Statements of Operations for the Six Months Ended
September 30, 2002 and 2001 (Unaudited) 4
Condensed Consolidated Statements of Cash Flows for the Six Months Ended
September 30, 2002 and 2001 (Unaudited) 5
Notes to Condensed Consolidated Financial Statements 6 - 15
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 16 - 30
Item 3. Quantitative and Qualitative Disclosures about Market Risk 31
Item 4. Controls and Procedures 32
Part II. Other Information
Item 1. Legal Proceedings 33
Item 2. Changes in Securities and Use of Proceeds 33
Item 4. Submission of Matters to a Vote of Security Holders 34
Item 6. Exhibits and Reports on From 8-K 34
Signature 35
Certifications 36 - 39
i
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ACXIOM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands)
September 30, March 31,
2002 2002
---------------- ------------------
Assets
Current assets:
Cash and cash equivalents $ 26,392 $ 5,676
Trade accounts receivable, net 196,077 185,579
Deferred income taxes 48,716 48,716
Refundable income taxes - 41,652
Other current assets 82,160 78,602
---------------- ------------------
Total current assets 353,345 360,225
Property and equipment, net of accumulated depreciation and
amortization 167,822 181,775
Software, net of accumulated amortization 70,339 61,437
Goodwill 215,515 174,655
Purchased software licenses, net of accumulated amortization 171,092 169,854
Unbilled and notes receivable, excluding current portions 27,178 40,358
Deferred costs, net of accumulated amortization 118,725 125,843
Other assets, net 33,123 42,687
---------------- ------------------
$ 1,157,139 $ 1,156,834
================ ==================
Liabilities and Stockholders' Equity
Current liabilities:
Current installments of long-term debt 34,352 23,274
Trade accounts payable 27,522 29,472
Accrued expenses:
Restructuring and impairment 1,653 3,022
Payroll 12,581 17,612
Other 32,589 43,176
Income taxes 5,320 -
Deferred revenue 59,409 61,114
---------------- ------------------
Total current liabilities 173,426 177,670
---------------- ------------------
Long-term debt, excluding current installments 328,647 396,850
Deferred income taxes 78,213 71,383
Commitments and contingencies
Stockholders' equity:
Common stock 8,925 8,734
Additional paid-in capital 319,607 281,355
Retained earnings 257,782 231,791
Accumulated other comprehensive loss (6,758) (8,609)
Treasury stock, at cost (2,703) (2,340)
---------------- ------------------
Total stockholders' equity 576,853 510,931
---------------- ------------------
$ 1,157,139 $ 1,156,834
================ ==================
See accompanying notes to condensed consolidated financial statements.
2
ACXIOM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except per share amounts)
For the Three Months Ended
September 30,
2002 2001
------------------------ ------------------------
Revenue $ 235,396 $ 215,204
Operating costs and expenses:
Salaries and benefits 75,050 77,584
Computer, communications and other equipment 63,829 51,609
Data costs 29,787 29,921
Other operating costs and expenses 43,197 36,129
Gains, losses and nonrecurring items, net (4,102) -
------------------------ ------------------------
Total operating costs and expenses 207,761 195,243
------------------------ ------------------------
Income from operations 27,635 19,961
------------------------ ------------------------
Other income (expense):
Interest expense (5,068) (7,213)
Other, net 1,551 (1,591)
------------- ----------- ------------------------
(3,517) (8,804)
------------------------ ------------------------
Earnings before income taxes 24,118 11,157
Income taxes 8,592 4,128
------------------------ ------------------------
Net earnings $ 15,526 $ 7,029
======================== ========================
Earnings per share:
Basic $ 0.18 $ 0.08
======================== ========================
Diluted $ 0.17 $ 0.08
======================== ========================
See accompanying notes to condensed consolidated financial statements.
3
ACXIOM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except per share amounts)
For the Six Months Ended
September 30,
2002 2001
------------------ -----------------
Revenue $ 460,802 $ 420,242
Operating costs and expenses:
Salaries and benefits 149,842 171,132
Computer, communications and other equipment 126,855 133,336
Data costs 58,731 60,710
Other operating costs and expenses 80,610 82,537
Gains, losses and nonrecurring items, net (4,559) 45,342
------------------ -----------------
Total operating costs and expenses 411,479 493,057
------------------ -----------------
Income (loss) from operations 49,323 (72,815)
------------------ -----------------
Other income (expense):
Interest expense (10,395) (13,955)
Other, net 1,542 (2,382)
------------------ -----------------
(8,853) (16,337)
------------------ -----------------
Earnings (loss) before income taxes 40,470 (89,152)
Income taxes 14,479 (32,542)
------------------ -----------------
Net earnings (loss) $ 25,991 $ (56,610)
================== =================
Earnings (loss) per share:
Basic $ 0.29 $ (0.63)
================== =================
Diluted $ 0.28 $ (0.63)
================== =================
See accompanying notes to condensed consolidated financial statements.
4
ACXIOM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
For the Six Months Ended
September 30,
2002 2001
----------------- -------------------
Cash flows from operating activities:
Net earnings (loss) $ 25,991 $ (56,610)
Adjustments to reconcile net earnings (loss) to net cash provided
by operations:
Depreciation and amortization 56,259 65,871
Loss (gain) on disposal or impairment of assets, net (51) 45,639
Deferred income taxes 7,552 (34,742)
Changes in operating assets and liabilities:
Accounts receivable (6,907) 1,684
Other assets 45,966 28,220
Accounts payable and other liabilities (13,752) (11,750)
Restructuring and impairment costs (1,369) (8,292)
----------------- -------------------
Net cash provided by operating activities 113,689 30,020
----------------- -------------------
Cash flows from investing activities:
Proceeds received from the disposition of assets 200 127
Proceeds received (used) from the disposition of operations 259 (2,423)
Capitalized software development costs (17,610) (11,399)
Capital expenditures (4,916) (8,789)
Deferral of costs (7,348) (26,702)
Investments in joint ventures and other investments (1,052) (5,747)
Proceeds from sale and leaseback transaction 7,729 1,964
Net cash paid in acquisitions (8,272) -
----------------- -------------------
Net cash used by investing activities (31,010) (52,969)
----------------- -------------------
Cash flows from financing activities:
Proceeds from debt 82,516 129,169
Payments of debt (156,700) (94,198)
Sale of common stock, net of repurchases 12,141 6,461
Payments on equity forward contracts - (23,547)
----------------- -------------------
Net cash (used) provided by financing activities (62,043) 17,885
----------------- -------------------
Effect of exchange rate changes on cash 80 4
----------------- -------------------
Net increase (decrease) in cash and cash equivalents 20,716 (5,060)
Cash and cash equivalents at beginning of period 5,676 14,176
----------------- -------------------
Cash and cash equivalents at end of period $ 26,392 $ 9,116
================= ===================
Supplemental cash flow information:
Cash paid (received) during the period for:
Interest $ 13,453 $ 11,333
Income taxes (40,281) 12,783
Noncash investing and financing activities:
Note receivable received in exchange for sale of operations 736 -
Issuance of warrants 1,317 -
Equity forward contracts settled through term note - 64,169
Enterprise software licenses acquired under software obligation 2,828 -
Acquisition of property and equipment under capital lease 2,310 -
================= ===================
See accompanying notes to condensed consolidated financial statements.
5
ACXIOM CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
These condensed consolidated financial statements have been prepared by Acxiom Corporation ("Registrant", "Acxiom" or "the
Company"), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC" or "the
Commission"). In the opinion of the Registrant's management, however, all adjustments necessary for a fair presentation of
the results for the periods included have been made and the disclosures are adequate to make the information presented not
misleading. All such adjustments are of a normal recurring nature. Certain note information has been omitted because it
has not changed significantly from that reflected in notes 1 through 21 of the Notes to Consolidated Financial Statements
filed as a part of Item 14 of the Registrant's annual report on Form 10-K for the fiscal year ended March 31, 2002 ("2002
Annual Report"), as filed with the Commission on May 15, 2002. This report and the accompanying financial statements should
be read in connection with the 2002 Annual Report. The financial information contained in this report is not necessarily
indicative of the results to be expected for any other period or for the full fiscal year ending March 31, 2003.
Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities
and the disclosure of contingent assets and liabilities to prepare these condensed consolidated financial statements in
conformity with accounting principles generally accepted in the United States. Actual results could differ from those
estimates. Certain of the accounting policies used in the preparation of these condensed consolidated financial statements
are complex and require management to make judgments and/or significant estimates regarding amounts reported or disclosed in
these financial statements. Additionally, the application of certain of these accounting policies is governed by complex
accounting principles and interpretations thereof. A discussion of the Company's significant accounting principles and the
application thereof is included in note 1 and in Item 7, Management's Discussion and Analysis of Financial Condition and
Results of Operations, to the Company's 2002 Annual Report.
Effective January 1, 2001, the Company changed its method of accounting for certain transactions, retroactive to April 1,
2000, in accordance with SEC Staff Accounting Bulletin 101 ("SAB 101"), "Revenue Recognition in Financial Statements." For
the quarters ended September 30, 2002 and 2001, and for the six months ended September 30, 2002 and 2001, the Company
recognized approximately $3.9 million and $4.9 million, respectively, and approximately $8.1 million and $10.0 million,
respectively, in revenue that was included in the SAB 101 cumulative effect adjustment.
Certain prior year amounts have been reclassified to conform to the current year presentation. These reclassifications had
no impact on net earnings (loss) as previously reported.
6
2. RESTRUCTURING, IMPAIRMENT AND OTHER CHARGES
Restructuring and Impairment Charges
On June 25, 2001, the Company announced a restructuring plan ("Restructuring Plan") for significant cost-reduction efforts,
including workforce reductions, the sale and leaseback of a significant amount of its computer equipment, and certain other
restructuring activities, asset impairments and other adjustments and accruals totaling $45.3 million. The charges recorded
by the Company include a loss on the sale-leaseback transaction of $31.2 million; $8.3 million in associate-related
reserves; $3.6 million for lease and contract termination costs and $2.2 million for abandoned or impaired assets and
transaction costs. Additionally, the Company recorded accelerated depreciation and amortization of approximately $25.8
million during the quarter ended June 30, 2001, on certain software and long-lived assets that are no longer in service or
have otherwise been deemed impaired.
Sale Leaseback Transaction
On June 29, 2001, in connection with the Restructuring Plan, the Company entered into an agreement whereby it sold equipment
with a net book value of $50.7 million to Technology Investment Partners, LLC ("TIP") and recorded a loss on this sale of
$31.2 million. Simultaneous with the sale of this equipment, the Company agreed to lease the equipment under a capital
lease from TIP for a period of thirty-six months. The Company received $2.0 million of the sale proceeds from TIP during
July 2001 and received an additional $4.0 million of the sales proceeds during December 2001. On August 30, 2002, the
Company amended its agreement with TIP whereby it reacquired from TIP certain equipment under the original sale and
leaseback arrangement that had not previously been funded by TIP. Simultaneous with this transaction, the Company entered
into an agreement with Merrill Lynch Capital ("MLC") whereby a portion of the repurchased equipment under the amended TIP
agreement was sold to MLC for net sales proceeds of $7.7 million. The agreement with MLC also provides a leaseback
provision, accounted for as a capital lease by the Company, whereby the Company is obligated to lease the equipment from MLC
for a period of thirty-six months.
Included in property and equipment at September 30, 2002 and March 31, 2002, is equipment of $8.6 million and $14.7 million,
respectively, net of accumulated depreciation and amortization, related to the assets under these leaseback arrangements.
Included in long-term debt at September 30, 2002 and March 31, 2002, are capital lease obligations under these leaseback
arrangements in the amount of $12.2 million and $5.6 million, respectively.
Montgomery Wards Bankruptcy
During the fourth quarter of the year ended March 31, 2001, the Company recorded a charge totaling $34.6 million relating to
the bankruptcy filing of Montgomery Ward ("Wards"), a significant customer of the Information Technology ("IT") Management
segment, for the write-down of impaired assets and for certain ongoing obligations that have no future benefit to the
Company. As of June 30, 2001, the Company is no longer obligated to provide services to Wards.
7
The following table shows the balances related to the Restructuring Plan and to Wards that were included in the
restructuring and impairment accruals as of March 31, 2002 and the changes in those balances during the six months ended
September 30, 2002 (dollars in thousands):
March 31, September 30,
2002 Payments 2002
--------- -------- -------------
Associate-related reserves $ 600 $ (419) $ 181
Contract termination costs 2,025 (823) 1,202
Transaction costs and other accruals 397 (127) 270
--------- -------- -------------
$3,022 $(1,369) $1,653
========= ========= =============
The remaining accruals will be paid out over periods ranging up to three years.
Other
During the quarter ended June 30, 2000, the compensation committee ("the Committee") of the Company committed to pay in cash
$6.3 million of "over-attainment" incentive that was attributable to results of operations in prior years. This
"over-attainment" was additional incentive to be paid in excess of the Company's normal at-risk incentive pay. In accordance
with the Company's over-attainment plan, the amount accrued was to be paid over a three-year period, assuming continued
performance of the Company. During the quarter ended September 30, 2001, the Company paid, and recorded as a reduction of
the accrual, $2.2 million of the over-attainment incentive. As of September 30, 2002, the Committee discontinued the
over-attainment incentive and determined that the remaining accrual would not be paid under the over-attainment plan based
on recent operating results. Accordingly, the remaining accrual of $4.1 million was reversed through gains, losses and
nonrecurring items, net, which is where the expense was originally recorded.
3. ACQUISITIONS
Effective August 12, 2002, the Company acquired certain assets and assumed certain liabilities of an employment screening
business owned by Trans Union, LLC ("Trans Union"), a related party. This employment screening business was incorporated as
Acxiom Information Security Systems, Inc. ("AISS") and offers a range of services including criminal and civil records
search, education and reference verification, and other verification services for its customers. Management believes AISS
will provide the Company with additional products and services and will support the Company's initiatives in the screening,
identification and security areas. The aggregate purchase price of $34.6 million consisted of cash of $10.0 million (of
which $7.5 million was paid at closing and $2.5 million was paid on October 1, 2002), 664,562 shares of common stock valued
at $10.5 million and warrants to purchase 1,272,024 shares of common stock, at an exercise price of $16.32, valued at $14.1
million. If the value of the 664,562 shares of common stock on August 12, 2003 (twelve months after the closing date) is
less than $10.0 million, the Company will be required to pay additional cash consideration in the amount of the deficit, but
not more than $5.0 million. If the value of those shares on August 12, 2003 is greater than $13.0 million, Trans Union will
be required to return shares of common stock in the amount of the excess, but not more than $5.0 million worth of common
stock. The results of operations of AISS are included in the Company's consolidated results from the date of acquisition.
The pro forma effect of this acquisition is not material to the Company's consolidated results for any of the periods
presented.
8
Effective June 1, 2002, the Company entered into an agreement with Publishing & Broadcasting Limited ("PBL") whereby Acxiom
purchased PBL's 50% ownership interest in an Australian joint venture ("Australian JV") for cash of $0.8 million (net of
cash acquired) and a note payable of $1.4 million, such that Acxiom now owns 100% of the Australian operation.
Additionally, the purchase agreement provides that Acxiom may pay PBL additional consideration, based on a percentage of the
Australian operation's results through March 31, 2007, and also provides PBL the option to repurchase between 25% and 49% of
the Australian JV subsequent to March 31, 2007, at an option price specified in the purchase agreement. The results of
operations of the Australian business are included in the Company's condensed consolidated financial statements beginning
June 1, 2002. Prior to that time, the Company accounted for the Australian JV as an equity method investment. The pro
forma effect of this acquisition is not material to the Company's consolidated results for any of the periods presented.
Management believes the Australian market is an important component of the Company's long-term global strategy. Sole ownership of the Australian operation will enable the Company to more quickly and effectively
capitalize on that opportunity.
The following table shows the initial allocation of the Australian JV and the AISS purchase prices to assets acquired and
liabilities assumed (dollars in thousands):
Australian JV AISS
------------- -----------
Assets acquired:
Cash $ 592 $ --
Goodwill 5,828 32,275
Other current and noncurrent assets 3,047 3,118
------------- -----------
9,467 35,393
Accounts payable and accrued expenses assumed 1,077 771
------------- -----------
Net assets acquired 8,390 34,622
Less:
Cash acquired 592 --
Common stock issued -- 10,525
Warrants issued for the purchase of
common stock -- 14,097
Previous investment in Australian JV 5,662 --
Note payable 1,364 2,500
------------ ------------
Net cash paid $ 772 $ 7,500
============ ============
9
4. DIVESTITURES
During the year ended March 31, 2002, the Company sold three of its business operations, including a minor portion of its
United Kingdom operations located in Spain and Portugal. During the quarter ended June 30, 2002, the Company sold the
remaining portion of its assets located in Spain, which primarily consisted of tax loss carryforwards. Gross proceeds from
the sale of these operations were $15.9 million, consisting of cash of $6.8 million and notes receivable of $9.1 million.
At September 30, 2002 and March 31, 2002, notes receivable relating to these transactions of $4.8 million and $5.2 million,
respectively, are included in the accompanying condensed consolidated financial statements. The Company recorded a gain
associated with the disposition in Spain of $0.5 million during the six months ended September 30, 2002, including the
write-off of $0.1 million of goodwill (see note 6).
Effective July 31, 2002, the Company sold its print shop business located in Chatsworth, California. Gross sales proceeds
from the sale were $0.7 million, consisting entirely of notes receivable. The gain on the sale of this print shop business,
which includes the write-off of $0.1 million of goodwill (see note 6), was not material.
5. OTHER CURRENT AND NONCURRENT ASSETS AND LIABILITIES
Unbilled and notes receivable are from the sales of software, data licenses, equipment sales and from the sale of divested
operations (see note 4), net of the current portions of such receivables. Other current assets include the current portion
of the unbilled and notes receivable of $38.7 million and $38.4 million at September 30, 2002 and March 31, 2002,
respectively. Other current assets also include prepaid expenses, non-trade receivables and other miscellaneous assets of
$43.5 million and $40.2 million at September 30, 2002 and March 31, 2002, respectively.
Other noncurrent assets consist of the following (dollars in thousands):
September 30, March 31,
2002 2002
-------------- ---------
Investments in joint ventures and other investments, net of
unrealized loss on available-for-sale marketable securities $19,496 $27,394
Other, net 13,627 15,293
-------------- ---------
$33,123 $42,687
============== =========
10
6. GOODWILL
The changes in the carrying amount of goodwill, by business segment, for the six months ended September 30, 2002, are as
follows (dollars in thousands):
Data and
Software
Services Products IT Management Total
----------- -------- ------------- ----------
Balances at March 31, 2002 $ 97,833 $1,533 $75,289 $174,655
2002
Acquisitions (note 3) 39,594 -- -- 39,594
Divestitures (note 4) (84) -- (131) (215)
Foreign currency translation adjustment 1,481 -- -- 1,481
---------- -------- ------------- ----------
Balances at September 30, 2002 $138,824 $1,533 $75,158 $215,515
========== ======== ============= ==========
7. LONG-TERM DEBT
Long-term debt consists of the following (dollars in thousands):
September 30, March 31,
2002 2002
------------- ---------
Convertible subordinated notes due 2009; interest at 3.75% $175,000 $ 175,000
Software license liabilities payable over terms up to seven
years; effective interest rates at approximately 6% 84,300 88,444
Term note, due 2005 64,169 64,169
Convertible subordinated notes, repaid April 2002 -- 62,589
Capital leases on land, buildings and equipment payable in
monthly payments of principal plus interest at
approximately 8%; remaining terms up to fifteen years 26,665 18,878
Other capital leases, debt and long-term liabilities 12,865 11,044
------------- ---------
Total long-term debt 362,999 420,124
Less current installments 34,352 23,274
------------- ---------
Long-term debt, excluding current installments $ 328,647 $396,850
============= ===========
The Company maintains a revolving credit facility that provides for aggregate borrowings of up to $175 million. Any future
borrowings under this facility will bear interest at LIBOR plus 2.25%, or at an alternative base rate plus 0.75% or at the
Federal funds rate plus 1.75%, depending upon the type of borrowing, are secured by substantially all of the Company's
assets and are due January 2005. There were no borrowings outstanding under this facility at either September 30, 2002 or
March 31, 2002.
On September 21, 2001, the Company executed an agreement for the settlement of certain equity forward contracts through
borrowings of $64.2 million from a bank under a term loan facility. The borrowings under this term loan bear interest,
11
payable semiannually, at LIBOR plus 3.75% or an alternative base rate. At September 30, 2002, the interest rate under this
facility was 5.61%. The borrowings under this facility are secured by substantially all of the Company's assets.
Under the terms of some of the above borrowings, the Company is required to maintain certain tangible net worth levels,
debt-to-cash flow and debt service coverage ratios, among other restrictions. At September 30, 2002, the Company was in
compliance with these covenants and restrictions. Accordingly, the Company has classified all portions of its debt
obligations due beyond September 30, 2003 as long-term in the accompanying condensed consolidated financial statements.
8. STOCKHOLDERS' EQUITY
Below is the calculation and reconciliation of the numerator and denominator of basic and diluted earnings (loss) per share
(in thousands, except per share amounts):
For the quarter ended For the six months ended
September 30, September 30,
2002 2001 2002 2001
---------------- --------------- ----------------- -----------------
Basic earnings (loss) per share:
Numerator - net earnings (loss) $ 15,526 $ 7,029 $ 25,991 $ (56,610)
Denominator - weighted-average
shares outstanding 88,481 89,856 88,131 89,894
outstanding
---------------- --------------- ----------------- -----------------
Basic earnings (loss)
per share $ 0.18 $ 0.08 $ 0.29 $ (0.63)
================ =============== ================= =================
Diluted earnings (loss) per share:
Numerator:
Net earnings (loss) $ 15,526 $ 7,029 $ 25,991 $ (56,610)
Interest expense on
convertible debt
(net of tax benefit) 1,050 -- 2,100 --
---------------- --------------- ----------------- -----------------
$ 16,576 $ 7,029 $ 28,091 $ (56,610)
---------------- --------------- ----------------- -----------------
Denominator:
Weighted-average shares
outstanding 88,481 89,856 88,131 89,894
Dilutive effect of common
stock options and warrants,
as computed under the 2,354 1,264 2,411 --
treasury stock method
Dilutive effect of
convertible debt, as
computed under the
if-converted method 9,589 -- 9,589 --
---------------- --------------- ----------------- -----------------
100,424 91,120 100,131 89,894
---------------- --------------- ----------------- -----------------
Diluted earnings (loss)
per share $ 0.17 $ 0.08 $ 0.28 $ (0.63)
================ =============== ================= =================
12
The equivalent share effect of the convertible debt was excluded from the above calculations for the quarter ended September
30, 2001, and the equivalent share effect of all stock options, stock warrants, equity forward contracts and convertible
debt were excluded from the above calculations for the six months ended September 30, 2001, because such items were
antidilutive. The equivalent share effect of convertible debt excluded for the quarter ended September 30, 2001 was 5.8
million, and the equivalent share effect of the convertible debt and the equivalent share effect of the common stock options
and warrants excluded for the six months ended September 30, 2001, were 5.8 million and 1.6 million, respectively. Interest
expense on convertible debt (net of income tax effect) excluded in computing diluted earnings (loss) per share for the
quarter and for the six months ended September 30, 2001, was $1.0 million and $1.9 million, respectively.
At September 30, 2002, the Company had options and warrants outstanding providing for the purchase of approximately 22.0
million shares of its common stock. Options and warrants to purchase shares of common stock that were outstanding during
the periods reported, but were not included in the computation of diluted earnings (loss) per share because the exercise
price was greater than the average market price of the common shares are shown below (in thousands, except per share
amounts):
For the quarter ended For the six months ended
September 30, September 30,
2002 2001 2002 2001
------------------ ------------------ -------------------- --------------------
Excluded number of
shares under options
and warrants 11,426 13,929 10,495 11,641
Range of exercise
prices $16.45 - 62.06 $11.50 - 62.06 $16.45 - 62.06 $11.50 - 62.06
================== ================== ==================== ====================
13
The Company applies the provisions of Accounting Principles Board Opinion No. 25 and related interpretations in accounting
for its stock-based compensation plans. Accordingly, no compensation cost has been recognized by the Company in the
accompanying condensed consolidated statements of operations for any of the fixed stock options granted. Had compensation
cost for options granted been determined on the basis of the fair value of the awards at the date of grant, consistent with
the methodology prescribed by Statement of Financial Accounting Standards ("SFAS") No. 123, the Company's net earnings
(loss) would have been reduced to the following pro forma amounts for the periods indicated (dollars in thousands, except
per share amounts):
For the quarter ended For the six months ended
September 30, September 30,
2002 2001 2002 2001
-------------- ------------- ------------- -------------
Net earnings (loss) As reported $ 15,526 $ 7,029 $ 25,991 $ (56,610)
============== ============= ============= =============
Pro forma $ 12,942 $ (48) $ 20,683 $ (70,467)
============== ============= ============= =============
Basic earnings (loss) As reported $ 0.18 $ 0.08 $ 0.29 $ (0.63)
per share
============== ============= ============= =============
Pro forma $ 0.15 $ 0.00 $ 0.23 $ (0.78)
============== ============= ============= =============
Diluted earnings (loss)
per share As reported $ 0.17 $ 0.08 $ 0.28 $ (0.63)
============== ============= ============= =============
Pro forma $ 0.14 $ 0.00 $ 0.23 $ (0.78)
============== ============= ============= =============
Pro forma net earnings (loss) reflect only options granted after fiscal 1995. Therefore, the full impact of calculating
compensation cost for stock options under SFAS No. 123 is not reflected in the pro forma net earnings (loss) amounts
presented above because compensation cost is reflected over the options' vesting period of up to nine years and compensation
cost for options granted prior to April 1, 1995 is not considered.
9. ALLOWANCE FOR DOUBTFUL ACCOUNTS
Trade accounts receivable are presented net of allowances for doubtful accounts, returns, and credits of $6.3 million at
both September 30, 2002 and at March 31, 2002.
10. MAJOR CUSTOMERS
No single customer accounted for more than 10% of revenue during the quarter or the six months ended September 30, 2002.
For the quarter and the six months ended September 30, 2001, the Company had one customer, Allstate Insurance Company, which
accounted for $21.5 million (10.0%) and $45.9 million (10.9%), respectively, of revenue.
14
11. SEGMENT INFORMATION
The following tables present information by business segment (dollars in thousands):
For the quarter ended For the six months ended
September 30, September 30,
2002 2001 2002 2001
---------------- ---------------- ---------------- -------------------
Revenue:
Services $178,893 $161,941 $348,262 $311,368
Data and Software Products 45,059 39,633 83,431 72,483
IT Management 56,907 53,261 113,368 106,227
Intercompany eliminations (45,463) (39,631) (84,259) (69,836)
---------------- ---------------- ---------------- -------------------
$235,396 $215,204 $460,802 $420,242
================ ================ ================ ===================
Income (loss) from operations:
Services $ 25,042 $ 17,411 $ 46,004 $ 4,371
Data and Software Products 8,636 3,134 11,306 (109)
IT Management 2,386 1,758 3,458 1,480
Intercompany eliminations (8,429) (2,342) (11,454) 901
Corporate and other -- -- 9 (79,458)
---------------- ---------------- ---------------- -------------------
$ 27,635 $ 19,961 $ 49,323 $(72,815)
================ ================ ================ ===================
Substantially all of the nonrecurring charges incurred with the Restructuring Plan discussed in note 2 have been recorded in
Corporate and other, since the Company does not hold individual segments responsible for these charges. During the quarter
ended June 30, 2002, the Company revised certain of its internal cost allocations to distribute substantially all recurring
costs to the business segments. Accordingly, the prior year's segment information has been restated to conform to the
current year presentation.
12. COMPREHENSIVE INCOME (LOSS)
The balance of accumulated other comprehensive loss, which consists of foreign currency translation adjustments and
unrealized depreciation, net of reclassification adjustments, on marketable securities classified as available-for-sale, was
$6.8 million and $8.6 million at September 30, 2002 and March 31, 2002, respectively. Comprehensive income (loss) was
$14.8 million and $7.7 million, respectively, for the quarters ended September 30, 2002 and 2001, and $27.8 million and
$(56.4) million, respectively, for the six-month periods ended September 30, 2002 and 2001.
13. CONTINGENCIES
Refer to Part II, Item 1 for a description of legal proceedings.
15
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Introduction
Acxiom Corporation ("Acxiom", "Registrant" or "the Company") integrates data, services and technology to create and deliver
customer and information management solutions for many of the largest, most respected companies in the world. The core
components of Acxiom's innovative solutions are customer data integration ("CDI") technology, data content, database services,
information technology ("IT") outsourcing, consulting and analytics, and privacy leadership. Founded in 1969, Acxiom is
headquartered in Little Rock, Arkansas, with locations throughout the United States, and in the United Kingdom ("U.K."), France
and Australia.
Results of Operations
For the quarter ended September 30, 2002, consolidated revenue was $235.4 million, reflecting a 9% increase from the previous
year. Adjusting the prior year for divested operations (see note 4 to the condensed consolidated financial statements), the
increase in revenue was 12%. Also excluding current year revenue from Acxiom Information Security Systems, Inc. ("AISS") and the
Company's Australian operations, which were acquired in the current year, the increase is 11%. The increase in revenue for the
quarter reflects increases in customer demand for Acxiom products and services and the layering effect of recognition of
subscription revenue from contracts signed in current and prior quarters as the Company provides service. For the six months
ended September 30, 2002, consolidated revenue was $460.8 million, up 10% from the same period a year ago. Again, adjusting 2001
for divested operations, the increase in consolidated revenue for the six-month period was 14%. Excluding revenue from current
year acquisitions, the increase is 13%. Overall, revenue increased 21% for the quarter and 23% year to date in a group of
industries that the Company has identified as "high opportunities": financial services, insurance, media, retail, automotive,
governmental and travel and entertainment. Revenue was down 5% for both the quarter and year to date in another group of
industries including telecommunications, technology, health and other miscellaneous areas.
The table below shows the Company's revenue by business segment for the quarters and for the six months ended September 30, 2002
and 2001 (dollars in millions).
For the quarter ended For the six months ended
September 30, September 30,
% %
2002 2001 Change 2002 2001 Change
----------- ----------- ----------- ------------ ----------- ----------
Services $ 178.9 $ 161.9 +10% $ 348.3 $ 311.3 +12%
Data and Software Products 45.1 39.6 +14 83.4 72.5 +15
IT Management 56.9 53.3 + 7 113.4 106.2 + 7 7
Intercompany eliminations
eliminations (45.5) (39.6) +15 (84.3) (69.8) +21
----------- ----------- ----------- ------------ ----------- ----------
$ 235.4 $ 215.2 +9% $ 460.8 $ 420.2 +10%
=========== =========== =========== ============ =========== ==========
16
The Services segment, the Company's largest segment, provides data warehousing, list processing and consulting services to large
corporations in a number of vertical industries. Segment revenue of $178.9 million in the current quarter increased 10% over the
prior year. Excluding divested operations, this segment grew 15% as compared to the same quarter a year ago. For the six months
ended September 30, 2002, the Services segment revenue increased 12% over the same period a year ago (17% increase after
adjusting the prior year for divested operations). Excluding both the divested operations and current year acquisitions, the
revenue increases for the quarter and six months were 12% and 16%, respectively. The increase in Services segment revenues year
over year is generally due to increases in the "high opportunities" industries, partially offset by decreases in the
telecommunications, technology, health and other miscellaneous industries as previously discussed.
The Data and Software Products segment provides data content and software primarily in support of the Services segment customers'
activities. Segment revenue of $45.1 million during the quarter ended September 30, 2002 increased 14% as compared to the
quarter ended September 30, 2001. For the six-month period, Data and Software Products segment revenue was $83.4 million, an
increase of 15% over the prior year. The increase in segment revenue as compared to the prior year amount is primarily
attributable to strong growth in software products (which includes AbiliTec-enabled services) and strategic data products
including reference and analytics products, offset by declines in list products and enhancement data.
The IT Management segment consists of outsourcing services primarily in the areas of data center, client server and network
management. IT Management segment revenue of $56.9 million in the September 30, 2002 quarter reflects an increase of 7% over the
prior year's September quarter. IT Management revenue was up 7% as well for the six-month period to $113.4 million. This
increase for both the quarter and the six-month period is primarily attributable to additional outsourcing contracts signed over
the last several quarters.
Certain revenues, including certain data and software product revenue, are reported both as revenue in the segment which owns the
customer relationship (generally the Services segment) as well as the Data and Software Products segment which owns the product
development, maintenance, sales support, etc. These duplicate revenues are eliminated in consolidation. The intercompany
elimination increased 15% for the quarter and 21% for the six-month period, reflecting the increase in data and software product
revenue recorded through the Services segment.
17
The following table presents operating expenses for the quarters and for the six months ended September 30, 2002 and 2001
(dollars in millions):
For the quarter ended For the six months ended
September 30, September 30,
% %
2002 2001 Change 2002 2001 Change
----------- ----------- ----------- ----------- ------------- -----------
Salaries and benefits $ 75.1 $ 77.6 - 3% $ 149.8 $ 171.1 - 12%
Computer, communications
and other equipment 63.8 51.6 +24 126.9 133.4 - 5
Data costs 29.8 29.9 -- 58.8 60.7 - 3
Other operating costs
and expenses 43.2 36.1 +20 80.6 82.6 - 2
Gains, losses and
non-recurring items, net (4.1) -- -- (4.6) 45.3 -110
----------- ----------- ---------- ----------- ------------- -----------
$ 207.8 $ 195.2 + 6% $ 411.5 $ 493.1 - 17%
=========== =========== ========== =========== ============= ===========
Salaries and benefits for the quarter decreased 3% from the prior year. For the six months, salaries and benefits decreased
12%. This decrease is primarily attributable to the work force reductions that were a component of the restructuring plan
discussed below and certain mandatory and voluntary salary reductions effective April 2001. The voluntary portion of the salary
reduction was reinstated on April 1, 2002, and one-half of the involuntary portion of the salary reduction was reinstated August
1, 2002. The remaining portion of the involuntary salary reduction was reinstated on November 1, 2002. The net impact of
reinstatement of the voluntary and involuntary salary reductions is expected to be approximately $16 million during fiscal 2003,
of which approximately $6 million had been incurred during the six months ended September 30, 2002. The Company is also
continuing to benefit internally from the deployment of AbiliTec-enabled processing to control incremental headcount.
Computer, communications and other equipment costs for the quarter ended September 30, 2002 increased 24% over the same quarter
in the prior year. For the six months ended September 30, 2002, computer, communications and other equipment costs decreased 5%
over the prior year. Adjusting for divested operations, current year acquisitions and accelerated depreciation and amortization
and other charges of approximately $25.8 million taken during the prior year on other assets that are no longer in service or
were otherwise deemed impaired, these costs increased 29% for the year-to-date period. Although the year-over-year increase is
29%, as adjusted for the items discussed above, the increase from the quarter ended June 30, 2002 was only 1.3%. Management
believes the investments made during the past twelve months will enable the Company to become more efficient.
Capitalized software, including purchased and internally developed, is evaluated for impairment on an annual basis, or when
events or changes in circumstances indicate the carrying amount of the asset might not be recoverable. At September 30, 2002,
the Company's most recent impairment analysis of its software indicates that no impairment exists. However, no assurance can be
given that future analysis of the Company's capitalized software will not result in an impairment charge.
18
Data costs for the quarter declined slightly as compared to the prior year. For the six months, these costs decreased 3%. The
decrease in data costs is primarily the result of lower Allstate Insurance Company ("Allstate") business in the six-month period,
offset in part by increases in data and data licenses sales.
Other operating costs and expenses for the quarter increased by 20% compared to the same quarter a year ago. Adjusting for
divested operations and current year acquisitions, these costs increased 21%. For the six months ended September 30, 2002, other
operating costs declined 2% as compared to the prior year, although these costs increased 5% after adjusting for divested
operations, current year acquisitions and accelerated depreciation and amortization and other charges of approximately $25.8
million discussed above. These costs increased year over year primarily as a result of increased postage and other mailing
related costs, combined with slightly higher other operating expenses including travel and entertainment, administration and
consulting related costs.
Gains, losses and nonrecurring items, net was a gain of $4.6 million for the current six-month period as a result of the disposal
in the first quarter of the remaining assets located in Spain, which consisted primarily of tax loss carryforwards (see note 4 to
the condensed consolidated financial statements) and the reversal in the second quarter of a $4.1 million accrual for
"over-attainment" incentives that will not be paid by the Company (see note 2 to the condensed consolidated financial
statements). Gains, losses and nonrecurring items, net for the six months ended September 30, 2001 was a loss of $45.3 million
as a result of the restructuring plan announced on June 25, 2001 ("Restructuring Plan") (see note 2 to the condensed consolidated
financial statements).
Income from operations for the current quarter was $27.6 million, compared to $20.0 million a year ago. Excluding gains, losses
and nonrecurring items, net, divested operations and current year acquisitions, the current quarter income from operations would
have been $23.7 million as compared to the prior year amount, as adjusted, of $19.8 million. For the six months ended September
30, 2002, income from operations of $49.3 million increased $122.1 million from the prior year. Again, excluding gains, losses
and nonrecurring items, net, divested operations and current year acquisitions, and also adjusting for the accelerated
depreciation and amortization discussed above and approximately $18 million of operating expenses incurred during the first
quarter of the prior year that did not recur as a result of the Restructuring Plan, operating income increased $30.9 million for
the current six-month period from $14.9 million in the prior year to $45.8 million in the current year.
Interest expense for the quarter of $5.1 million ($10.4 million for the six-month period) decreased from $7.2 million during the
same quarter last year ($14.0 million for the prior year six-month period), reflecting a combination of significantly lower
average debt levels this year and lower weighted-average interest rates. Other, net changed from $1.6 million expense in last
year's second quarter to $1.6 million income in this year's second quarter primarily due to the consolidation of the Australian
joint venture, which was recorded on the equity method in the prior year. The current year income primarily includes interest
income on notes receivable. Other, net for the six months ended September 30, 2002 was income of $1.5 million, compared to
expense of $2.4 million a year ago.
19
Earnings before income taxes of $24.1 million for the current quarter increased $13.0 million over the same quarter a year ago.
Excluding the gains, losses and nonrecurring items, net, the divested operations and current year acquisitions, earnings before
income taxes would have been $20.2 million in the current quarter compared to $11.1 million in the prior year. For the six
months ended September 30, 2002, earnings before income taxes of $40.5 million increased $129.7 million over the prior period
loss of $89.2 million. Excluding the gains, losses and nonrecurring items, net, divested operations, current year acquisitions
and excluding the accelerated depreciation and amortization discussed above and approximately $18 million of operating expenses
incurred during the first quarter of the prior year that did not recur as a result of the Restructuring Plan, the change from the
prior year would have been an increase of approximately $37.2 million for the six months ended September 30, 2002 to earnings of
$37.0 million from a loss of $0.2 million for the six months ended September 30, 2001.
The Company's effective tax rate was 35.6% in the current quarter and 35.8% for the current six-month period, compared to 37% for
the prior year quarter and 36.5% in the six-month period ended September 30, 2001. The Company currently expects an effective
tax rate of approximately 36% for fiscal 2003. This estimate is based on current tax law and current estimates of earnings.
Diluted earnings (loss) per share for the current quarter was $0.17 compared to $0.08 a year ago, and $0.28 for the current
six-month period compared to $(0.63) a year ago. Excluding the special charges included in gains, losses and nonrecurring items,
net; the accelerated depreciation and amortization recorded during the prior year; divested operations; current year
acquisitions; and approximately $18 million of operating expenses incurred during the first quarter of the prior year that did
not recur as a result of the Restructuring Plan, diluted earnings per share would have been $0.14 for the current quarter and
$0.26 for the six months ended September 30, 2002, and would have been $0.08 for the prior year quarter and zero for the six
months ended September 30, 2001.
Capital Resources and Liquidity
Working capital at September 30, 2002 totaled $179.9 million compared to $182.6 million at March 31, 2002. At September 30,
2002, the Company had available credit lines under its revolving credit facility of $175 million of which none was outstanding.
The Company's debt-to-capital ratio (capital defined as long-term debt plus stockholders' equity) was 36% at September 30, 2002,
compared to 44% at March 31, 2002 and 39% at June 30, 2002. The decrease largely relates to strong cash flow during the current
year. Included in long-term debt at both September 30, 2002 and March 31, 2002, are the Company's 3.75% convertible notes in the
amount of $175 million ("3.75% Notes"). The conversion price for the 3.75% Notes is $18.25 per share. If the price of the
Company's common stock increases above the conversion price, the 3.75% Notes may be converted to equity. Total stockholders'
equity has increased to $576.9 million at September 30, 2002 from $510.9 million at March 31, 2002, primarily due to the net
income reported during the current six-month period, proceeds from the sale of common stock, and shares of common stock and
warrants for the purchase of shares of common stock issued in connection with an acquisition discussed below.
20
Cash provided by operating activities was $113.7 million for the six months ended September 30, 2002, compared to $30.0 million
for the same period in the prior year. The largest single component in the year-to-year change was net income of $26.0 million
in the current year as compared to a loss of $56.6 million in the prior year. Operating cash flow in the current period includes
a refund of Federal income taxes received in June 2002 in the amount of approximately $40 million as a result of the utilization
of Federal tax loss carrybacks. Accounts receivable days sales outstanding were 70 days at September 30, 2002, compared to 72
days at June 30, 2002 and 63 days at March 31, 2002.
Investing activities used $31.0 million for the fiscal year-to-date period ended September 30, 2002, compared to $53.0 million a
year previously. Investing activities in the current year include capitalized software development costs of $17.6 million ($11.4
million in 2001), capital expenditures of $4.9 million ($8.8 million in 2001) and $7.3 million of cost deferrals ($26.7 million
in 2001). Capitalized software costs in the current year include capitalization of the Company's recently announced new data
products, new security products and Acxiom's new customer data integration technology. Capital expenditures decreased compared
to the previous year due to measures the Company initiated to control costs, as well as the Company's decision to generally lease
equipment which is required to support customers to match cash inflows from customer contracts and cash outflows. Deferral of
costs, which are primarily salaries and benefits and other direct and incremental third party costs, were higher in the prior
year due to capitalization of equipment acquired in connection with customer solutions for which the customer has paid at
inception of the contract. The Company also defers revenue related to these transactions and amortizes both the deferred cost
and deferred revenue over the life of the contract. Investing activities during the current year also include advances made to
fund certain investments and joint ventures operations of $1.1 million, compared to $5.7 million in the prior year, $8.3 million
of cash paid (net of cash acquired) for acquisitions in the current year as discussed below, and $7.7 million of cash proceeds
during the current year from a sale leaseback transaction discussed in note 2 to the accompanying condensed consolidated
financial statements.
Effective August 12, 2002, the Company acquired certain assets and assumed certain liabilities of an employment screening
business owned by Trans Union, LLC ("Trans Union"), a related party. This employment screening business was incorporated as
Acxiom Information Security Systems, Inc. ("AISS") and offers a range of services including criminal and civil records search,
education and reference verification, and other verification services for its customers. Management believes AISS will provide
the Company with additional products and services and will support the Company's initiatives in the screening, identification and
security areas. The aggregate purchase price of $34.6 million consisted of cash of $10.0 million (of which $7.5 million was paid
at closing and $2.5 million was paid on October 1, 2002), 664,562 shares of common stock valued at $10.5 million and warrants to
purchase 1,272,024 shares of common stock, at an exercise price of $16.32, valued at $14.1 million. If the value of the 664,562
shares of common stock on August 12, 2003 (twelve months after the closing date) is less than $10.0 million, the Company will be
required to pay additional cash consideration in the amount of the deficit, but not more than $5.0 million. If the value of
those shares on August 12, 2003 is greater than $13.0 million, Trans Union will be required to return shares of common stock in
the amount of the excess, but not more than $5.0 million worth of common stock (see note 3 to the condensed consolidated
financial statements). Based on the closing price of the Company's common stock of $12.60 per share on October 31, 2002, the
value of the 664,562 shares of common stock was $8.4 million. Accordingly, had this adjustment to the purchase price been
determined as of October 31, 2002, the Company would be required to pay Trans Union $1.6 million of additional cash
consideration, which would be charged to additional paid-in capital.
21
Effective June 1, 2002, the Company entered into an agreement with Publishing & Broadcasting Limited ("PBL") whereby Acxiom
purchased PBL's 50% ownership interest in an Australian joint venture ("Australian JV") for cash of $0.8 million (net of cash
acquired) and a note payable of $1.4 million, such that Acxiom now owns 100% of the Australian operation. Additionally, the
purchase agreement provides that Acxiom may pay PBL additional consideration, based on a percentage of the Australian operation's
results through March 31, 2007, and also provides PBL the option to repurchase between 25% and 49% of the Australian JV
subsequent to March 31, 2007, at an option price specified in the purchase agreement. The Australian JV purchase price, together
with Acxiom's previously recorded investment in the Australian JV, resulted in an excess of the purchase price over the fair
value of net assets acquired of $5.8 million (see note 3 to the condensed consolidated financial statements).
With respect to certain of its investments, Acxiom has provided cash advances to fund losses and cash flow deficits of $1.1
million during the six months ended September 30, 2002. Although Acxiom has no commitment to continue to do so, the Company may
continue to fund such losses and deficits until such time as certain of these investments become profitable. Additionally,
Acxiom may, at its discretion, discontinue providing financing to these investments during future periods. In the event that
Acxiom ceases to provide funding and these investments have not achieved profitable operations, the Company may be required to
record an impairment charge up to the amount of the carrying value of its investments ($23.5 million at September 30, 2002,
excluding the valuation allowance of $4.0 million for temporary impairment). Also, during the current year, the Company recorded
unrealized losses on certain of its investments as a component of other comprehensive income (loss) in the amount of $1.5
million, net of related income tax effect. In the event that declines in the value of its investments continue, the Company may
be required to record further unrealized losses as a component of other comprehensive income (loss) and/or "other than temporary"
impairment as a charge to earnings.
Financing activities in the current year used $62.0 million, a large portion of which relates to net repayments of the Company's
revolving credit facility and certain other of the Company's credit facilities. Financing activities in the prior year provided
$17.9 million primarily due to proceeds received from debt. Proceeds from the sale of common stock through stock options and the
employee stock purchase plan were $12.1 million in the current year and $6.5 million during the prior year. Additionally, during
the prior year, the Company paid $23.5 million on certain equity forward contracts.
The Company has entered into certain synthetic operating lease facilities for computer equipment, furniture and an aircraft.
These synthetic operating lease facilities are accounted for as operating leases under generally accepted accounting principles
and are treated as capital leases for income tax reporting purposes. These synthetic lease arrangements provide the Company with
a more cost-effective way to acquire equipment than alternative financing arrangements and better match inflows of cash from
customer contracts to outflows related to lease payments. Lease terms under the computer equipment and furniture facility range
from three to seven years, with the Company having the option at expiration of the initial term to return, or purchase at a fixed
price, or extend or renew the term of the leased equipment.
22
As of September 30, 2002, the total amount drawn under these synthetic operating lease facilities was $180.4 million and the
remaining capacity for additional funding (for computer equipment and furniture only) was $73.1 million. The Company has made
aggregate payments of $98.1 million through September 30, 2002.
The Company has also entered into a real estate synthetic lease arrangement with respect to a facility under construction in
Little Rock, Arkansas and land in Phoenix, Arizona. This synthetic lease arrangement provides the Company with more desirable
terms than other alternative construction financing options. Under the arrangement, the Company has agreed to lease each
property for an initial term of five years with an option to renew for an additional two years, subject to certain conditions.
The lessors have committed to fund up to a maximum of $45.8 million for the construction of the Little Rock building and
acquisition of the land at both sites. At September 30, 2002, the remaining amount of the commitment available from the lessors
was approximately $7.7 million. The Little Rock building is expected to cost approximately $30 to $35 million, including
interest during construction, and is expected to be completed in December 2002. The impact of the leasing arrangement is
expected to reduce operating cash flow by approximately $3 million per year over the term of the lease, which will be partially
offset by reductions in current leased facilities. At any time during the term of the lease, Acxiom may, at its option, purchase
the land and building for a price approximately equal to the amount expended by the lessors. If the Company does not purchase
the land and building, the Company has guaranteed a residual value of 87% of the land and construction costs or approximately $40
million at the end of the lease term. During June 2002, the Financial Accounting Standards Board ("FASB") issued an exposure
draft entitled "Consolidation of Certain Special-Purpose Entities." The provisions of this exposure draft, in its current form,
could impact the Company's accounting for this real estate synthetic lease arrangement, as discussed in the New Accounting
Pronouncements portion of this report. However, management does not think this exposure draft will impact the Company's current
accounting for the synthetic operating lease facilities for computer equipment, furniture and the aircraft.
23
The following table presents Acxiom's contractual cash obligations and purchase commitments at September 30, 2002 (dollars in
thousands):
For the periods ending March 31, (1)
-------------------------------------------------------------------------------------------------
2003 2004 2005 2006 2007 Thereafter Total
--------- --------- ---------- ---------- ---------- ----------- -----------
Long-term debt
$ 21,055 $ 23,375 $ 21,712 $ 76,781 $ 13,281 $ 206,795 $ 362,999
--------- --------- ---------- ---------- ---------- ----------- -----------
Synthetic
airplane lease 689 1,378 1,378 1,378 1,378 5,167 11,368
Synthetic equipment
and furniture
leases 18,316 25,972 8,243 1,695 607 304 55,137
Synthetic real
estate lease 1,500 3,000 3,000 1,500 -- -- 9,000
--------- --------- ---------- ---------- ---------- ----------- -----------
Total synthetic
leases 20,505 30,350 12,621 4,573 1,985 5,471 75,505
Equipment operating
leases 11,356 20,348 14,834 6,628 1,596 -- 54,762
Building operating
leases 4,420 8,096 7,062 5,674 5,503 42,690 73,445
Partnerships
building leases 1,187 2,373 2,301 2,084 2,084 4,665 14,694
Related party
airplane lease 451 902 902 902 902 2,707 6,766
--------- --------- ---------- ---------- ---------- ----------- -----------
Total lease payments 37,919 62,069 37,720 19,861 12,070 55,533 225,172
Operating software
license obligations 6,675 11,389 4,415 4,235 -- -- 26,714
--------- --------- ---------- ---------- ---------- ----------- -----------
Total operating
lease and software
license obligations 44,594 73,458 42,135 24,096 12,070 55,533 251,886
--------- --------- ---------- ---------- ---------- ----------- -----------
Total contractual
cash obligations $ 65,649 $ 96,833 $ 63,847 $ 100,877 $ 25,351 $ 262,328 $ 614,885
========= ========= ========== ========== ========== =========== ===========
Purchase commitment
on synthetic
airplane lease -- -- -- -- -- 4,398 4,398
Purchase commitments
on synthetic
equipment and
furniture leases 3,774 22,246 5,489 2,109 1,626 -- 35,244
leases
Purchase commitment
on synthetic
real estate lease -- -- -- 45,800 -- -- 45,800
--------- --------- ---------- ---------- ---------- ----------- -----------
Total purchase
commitments $ 3,774 $ 22,246 $ 5,489 $ 47,909 $ 1,626 $ 4,398 $85,442
========= ========= ========== ========== ========== =========== ===========
(1) Contractual cash obligations and purchase commitments for fiscal 2003 represent amounts for the period from October 1, 2002
through March 31, 2003. All other years represent contractual cash obligations and purchase commitments for the twelve
months ending March 31.
24
The synthetic lease term for the aircraft expires in January 2010, with the company having the option at expiration to either
purchase the aircraft at a fixed price, renew the lease for an additional twelve month period (with a nominal purchase price paid
at the expiration of the renewal period), or return the aircraft in the condition and manner required by the lease. The purchase
commitment on the synthetic airplane lease assumes the lease terminates and is not renewed, and the Company elects to purchase
the aircraft.
The purchase commitments on the synthetic equipment and furniture leases assume the leases terminate and are not renewed, and the
Company elects to purchase the assets. The purchase commitment on the synthetic real estate lease assumes the Company elects to
purchase the building from the lessor at the end of the original lease term. The Company also has the option to renew the lease
for two one-year periods, or to allow the lessor to sell the building.
The following table shows certain other contingencies or guarantees under which the Company could be required, in certain
circumstances, to make cash payments as of September 30, 2002 (dollars in thousands):
Residual value guarantee on related
party airplane lease $ 4,363
Residual value guarantee on the
synthetic real estate lease 40,000
Contingent cash payment on AISS
acquisition 5,000
Guarantees on certain partnerships'
indebtedness and other loans 5,715
Outstanding letters of credit 10,658
===============
The total of the partnerships' indebtedness and other loans, of which the Company guarantees the portion noted above, is $14.1
million.
The related party airplane lease relates to an aircraft leased from a business partially owned by an officer of the Company. The
Company has agreed to pay the difference, if any, between the sales price of the aircraft and 70% of the related loan balance
should the Company elect to exercise its early termination rights or not extend the lease beyond its initial term and the lessor
sells the equipment as a result.
While the Company does not have any other material contractual commitments for capital expenditures, minimum levels of
investments in facilities and computer equipment continue to be necessary to support the growth of the business. It should be
noted, however, that the Company has spent considerable capital over recent years building the AbiliTec infrastructure. It is
the Company's current intention generally to lease any new required equipment to better match cash outflows with customer
inflows. In some cases, the Company also licenses software and sells hardware to customers. In addition, new outsourcing or
facilities management contracts frequently require substantial up-front capital expenditures in order to acquire or replace
existing assets. Management believes that the Company's existing available debt and cash flow from operations will be sufficient
to meet its working capital and capital expenditure requirements for the foreseeable future.
25
The Company also evaluates acquisitions from time to time, which may require up-front payments of cash. Depending on the size of
the acquisition it may be necessary to raise additional capital. If additional capital becomes necessary as a result of any
material variance of operating results from the Company's projections or from potential future acquisitions, the Company could
use available borrowing capacity under its revolving credit agreement, and/or the issuance of other debt or equity securities.
However, no assurance can be given that the Company would be able to obtain funding through the issuance of other debt or equity
securities at terms favorable to the Company, or that such funding would be available.
The Company has never paid cash dividends on its common stock. It is possible that dividends may be declared in the future if
the board of directors determines that conditions warrant the payment of dividends. For the present, however, the Company
intends to retain its earnings to provide funds for its current operations and for the continued expansion of its business.
Other Information
No single customer accounted for more than 10% of revenue during the quarter or the six months ended September 30, 2002. The
Company had one customer, Allstate, which accounted for $21.5 million (10.0%) of revenue during the quarter ended September 30,
2001, and $45.9 million (10.9%) of revenue during the six months ended September 30, 2001.
In accordance with a data center management agreement dated July 27, 1992 between Acxiom and Trans Union, Acxiom (through its
subsidiary, Acxiom CDC, Inc.) acquired all of Trans Union's interest in its Chicago data center and agreed to provide Trans Union
with various data center management services. The current term of the agreement expires in 2005. In a 1992 letter agreement,
Acxiom agreed to use its best efforts to cause one person designated by Trans Union to be elected to Acxiom's board of
directors. Trans Union designated its CEO and President, Harry C. Gambill, who was appointed to fill a vacancy on the board in
November 1992 and was elected at the 1993 annual meeting of stockholders to serve a three-year term. He was elected to serve
additional three-year terms at the 1996, 1999 and 2002 annual stockholders meetings. Under a second letter agreement, executed
in 1994 in connection with an amendment to the 1992 agreement, Acxiom agreed to use its best efforts to cause two people
designated by Trans Union to be elected to Acxiom's board of directors. In addition to Mr. Gambill, Trans Union designated
Robert A. Pritzker, an executive officer of Marmon Industrial Corporation, who was appointed to fill a newly created position on
Acxiom's board of directors in October 1994. Mr. Pritzker was elected to serve a three-year term at the 1995 annual meeting and
was elected to serve a second three-year term at the 1998 annual meeting. Mr. Pritzker resigned from the board in May 2000, to
attend to other business obligations. While these undertakings by Acxiom are in effect until the end of the current term of the
agreement, Acxiom has been notified that Trans Union does not presently intend to designate another individual to serve as
director. Acxiom recorded revenue from Trans Union of approximately $13.2 million for the quarter ended September 30, 2002 and
approximately $25.8 million for the six months ended September 30, 2002. All revenues received from Trans Union have been in
accordance with the pricing terms established under the agreements.
Effective April 1, 2002, Acxiom and Trans Union entered into a marketing joint venture that will serve as a sales agent for both
parties for certain existing mutual clients. The purpose of the joint venture is to provide these joint clients with
leading-edge solutions that leverage the strengths of both parties. Expected to serve a small number of financial service
26
clients, the joint venture will market substantially all of the products and services currently offered by Acxiom and Trans
Union, as well as any new products and services that may be agreed upon. The parties have agreed to share equally the aggregate
incremental increase (or decrease) in revenue and direct expenses generated from any client supported by the joint venture. If
either party determines that its participation in the joint venture is economically disadvantageous, it may terminate the
arrangement after certain negotiation procedures specified in the agreement have occurred. The results of operations from this
joint venture were not material for the quarter or for the six months ended September 30, 2002.
New Accounting Pronouncements
In May 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13,
and Technical Corrections." Under the provisions of SFAS No. 145, gains and losses from the early extinguishment of debt are no
longer classified as an extraordinary item, net of income taxes, but are included in the determination of pretax earnings. The
effective date for SFAS No. 145 is for fiscal years beginning after May 15, 2002, with early application encouraged. Upon
adoption, the Company will reclassify all gains and losses from the extinguishment of debt previously reported as an
extraordinary item to pretax earnings.
In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities." SFAS No. 146
addresses accounting and reporting for costs associated with exit or disposal activities by requiring that a liability for a cost
associated with an exit or disposal activity be recognized and measured at fair value only when the liability is incurred. SFAS
No. 146 also nullifies Emerging Issues Task Force Issue 94-3, "Liability Recognition for Certain Employee Termination Benefits
and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)." The provisions of SFAS No. 146 are
effective for exit or disposal activities that are initiated after December 31, 2002.
The FASB currently has outstanding in exposure draft format, a proposed Statement of Financial Accounting Standards ("SFAS"),
"Accounting for Financial Instruments with Characteristics of Liabilities, Equity or Both." This exposure draft, in its current
form, could have a significant impact on the Company's accounting for its convertible debt obligations by requiring some amount
of those convertible debt obligations to be classified as equity. The issuance of a final SFAS is expected during fiscal 2003.
The Company will continue to monitor the progress of this exposure draft and its potential impact on the Company's financial
position and/or results of operations.
In May 2002, the FASB issued an exposure draft entitled "Guarantor's Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness of Others" as a proposed interpretation of SFAS No. 5, 57 and 107 ("Proposed
Interpretation"). Under the provisions of the Proposed Interpretation, a guarantor would be required to recognize, at the
inception of the guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee. A guarantor
would also be required to make additional disclosures in its financial statements about obligations under certain guarantees
issued. The Proposed Interpretation, if issued as an authoritative pronouncement in its current form, would require the Company
27
to recognize a liability in its consolidated financial statements equal to the fair value of its guarantees, including any
guarantees issued in connection with its synthetic equipment and real estate lease arrangements. The provisions of the Proposed
Interpretation, in its current form, would be effective in the first interim period of the first fiscal year beginning after
September 15, 2002, as a cumulative effect of a change in accounting principle. The Company will continue to monitor this
Proposed Interpretation and the potential impact to its consolidated financial statements.
As previously discussed, the FASB issued an exposure draft in June 2002 entitled "Consolidation of Certain Special-Purpose
Entities" ("Exposure Draft"). Under the provisions of the Exposure Draft, the underlying assets, liabilities and results of
activities of a large number of special-purpose entities ("SPE's") would be required to be consolidated into the financial
statements of its primary beneficiary. Accordingly, the Company may be required to record the underlying real estate asset and
related depreciation expense and the underlying debt and related interest expense associated with the real estate synthetic lease
arrangement discussed above should the Exposure Draft be issued in its current form. The provisions of the Exposure Draft, in
its current form, would be effective and applied to all SPE's existing as of the beginning of the year of the first fiscal year
or interim period beginning after March 15, 2003. However, no final authoritative pronouncement has been issued and the Exposure
Draft may change prior to issuance in its final form. The Company will continue to monitor this Exposure Draft and the potential
impact on its consolidated financial statements.
In October 2002, the FASB issued an exposure draft entitled "Accounting for Stock-Based Compensation - Transition and Disclosure"
as an amendment of SFAS No. 123. This exposure draft provides alternative methods of transition for a voluntary change to the
fair value method of accounting for stock-based employee compensation. In addition, it would require more prominent disclosures
about the method of accounting for stock-based employee compensation and the effect of the method used on reported results in
both annual and interim financial statements. The provisions of this exposure draft, in its current form, would be effective for
fiscal years ending after December 15, 2002, and for financial reports containing condensed financial statements for interim
periods beginning after December 15, 2002. The Company will continue to monitor this exposure draft and its potential impact to
the Company's consolidated financial statements.
Forward-looking Statements
This document and other written reports and oral statements made from time to time by us and our representatives contain
forward-looking statements. These statements, which are not statements of historical fact, may contain estimates, assumptions,
projections and/or expectations regarding our financial position, results of operations, market position, product development,
growth opportunities, economic conditions, and other similar forecasts and statements of expectation. We generally indicate
these statements by words or phrases such as "anticipate," "estimate," "plan," "expect," "believe," "intend," "foresee," and
similar words or phrases. These forward-looking statements are not guarantees of future performance and are subject to a number
of factors and uncertainties that could cause our actual results and experiences to differ materially from the anticipated
results and expectations expressed in such forward-looking statements.
28
The factors and uncertainties that could cause actual results to differ materially from those expressed in, or implied by, the
forward-looking statements include but are not limited to the following:
o the complexity and uncertainty regarding the development of new high technologies;
o the possible loss of market share through competition or the acceptance of our technological offerings on a less rapid
basis than expected;
o the possibility that economic or other conditions might lead to a reduction in demand for our products and services;
o the possibility that the current economic slowdown may worsen and/or persist for an unpredictable period of time;
o the possibility that economic conditions will not improve as rapidly as expected;
o the possibility that significant customers may experience extreme, severe economic difficulty;
o the possibility that sales cycles may lengthen;
o the continued ability to attract and retain qualified technical and leadership associates and the possible loss of
associates to other organizations;
o the ability to properly motivate our sales force and other associates;
o the ability to achieve cost reductions and avoid unanticipated costs;
o the continued availability of credit upon satisfactory terms and conditions;
o the introduction of competent, competitive products, technologies or services by other companies;
o changes in consumer or business information industries and markets;
o our ability to protect proprietary information and technology or to obtain necessary licenses on commercially reasonable
terms;
o the difficulties encountered when entering new markets or industries;
o changes in the legislative, accounting, regulatory and consumer environments affecting our business, including but not
limited to litigation, legislation, regulations and customs relating to our ability to collect, manage, aggregate and
use data;
o the possibility that data suppliers might withdraw data from us, leading to our inability to provide certain products and
services;
29
o the effect of our short-term contracts on the predictability of our revenues or the possibility that customers may cancel
or modify their agreements with us;
o the possibility that the amount of ad hoc project work will not be as expected;
o the potential loss of data center capacity or interruption of telecommunication links or power sources;
o postal rate increases that could lead to reduced volumes of business;
o the potential disruption of the services of the United States Postal Service;
o the successful integration of acquired businesses and strategic alliances;
o with respect to the providing of products or services outside our primary base of operations in the United States, all of
the above factors and the difficulty of doing business in numerous sovereign jurisdictions due to differences in
culture, laws and regulations; and
o other competitive factors.
In light of these risks, uncertainties and assumptions, we caution readers not to place undue reliance on any forward-looking
statements. We undertake no obligation to publicly update or revise any forward-looking statements based on the occurrence of
future events, the receipt of new information or otherwise.
30
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Acxiom's earnings are affected by changes in short-term interest rates primarily as a result of its revolving credit agreement
and term note, which bear interest at a floating rate. Acxiom does not use derivative or other financial instruments to mitigate
the interest rate risk. Risk can be estimated by measuring the impact of a near-term adverse movement of 10% in short-term
market interest rates. If short-term market interest rates average 10% more during the next four quarters than during the
previous four quarters, there would be no material adverse impact on Acxiom's results of operations. Acxiom has no material
future earnings or cash flow expenses from changes in interest rates related to its other long-term debt obligations as
substantially all of Acxiom's remaining long-term debt instruments have fixed rates. At both September 30, 2002 and March 31,
2002, the fair value of Acxiom's fixed rate long-term obligations approximated carrying value.
Although Acxiom conducts business in foreign countries, principally the United Kingdom, foreign currency translation gains and
losses are not material to Acxiom's consolidated financial position, results of operations or cash flows. Accordingly, Acxiom is
not currently subject to material foreign exchange rate risks from the effects that exchange rate movements of foreign currencies
would have on Acxiom's future costs or on future cash flows it would receive from its foreign investment. To date, Acxiom has
not entered into any foreign currency forward exchange contracts or other derivative instruments to hedge the effects of adverse
fluctuations in foreign currency exchange rates.
31
Item 4. Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures.
As required under the Sarbanes-Oxley Act of 2002, within the 90 days prior to the date of this report, the Company
carried out an evaluation, under the supervision and with the participation of the Company's management, including the
Registrant's Company Leader (Chief Executive Officer) and its Company Financial Operations Leader (Chief Financial
Officer), of the effectiveness of the design and operation of the Company's "disclosure controls and procedures," which
are defined under SEC rules as controls and other procedures of a company that are designed to ensure that information
required to be disclosed by a company in the reports that it files under the Exchange Act is recorded, processed,
summarized and reported within required time periods. Based upon that evaluation, the Registrant's Company Leader and
its Company Financial Operations Leader concluded that the Company's disclosure controls and procedures were effective.
(b) Changes in Internal Controls
Except as discussed in the following paragraph, there were no significant changes in the Company's internal controls or
other factors that could significantly affect these controls subsequent to the date of their evaluation.
On October 14, 2002, the Company retained Ernst & Young LLP ("E&Y") to "co-source" the management and operation of
an internal audit function. Under this "co-source" arrangement, both E&Y and the Company will provide management and
staff for the internal audit function, under the direction of Company management. On October 30, 2002, the audit committee
of the board of directors approved this arrangement.
32
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
On September 20, 1999, the Company and certain of its directors and officers were sued by an individual shareholder in
a purported class action filed in the United States District Court for the Eastern District of Arkansas ("the
Court"). The action alleges that the defendants violated Section 11 of the Securities Act of 1933 ("the 1933 Act") in
connection with the July 23, 1999 public offering of 5,421,000 shares of the common stock of the Company. In
addition, the action seeks to assert liability against the Company Leader pursuant to Section 15 of the 1933 Act. The
action seeks to have a class certified of all purchasers of the stock sold in the public offering. Two additional
suits were subsequently filed in the same venue against the same defendants and asserting the same allegations. On
March 29, 2001, the Court granted the defendants' motion to dismiss. The plaintiffs appealed the decision to dismiss
to the United States Court of Appeals for the Eighth Circuit. On July 15, 2002, the Eighth Circuit upheld the Court's
motion to dismiss, and on September 11, 2002, the Eighth Circuit denied the plaintiff's petition for rehearing.
The Company is involved in various other claims and litigation matters that arise in the ordinary course of the
business. None of these, however, are believed to be material in their nature or scope.
Item 2. Changes in Securities and Use of Proceeds
Effective August 12, 2002, the Company issued 664,562 shares of common stock valued at $10.5 million and warrants to
purchase 1,272,024 shares of common stock valued at $14.1 million in partial consideration for the acquisition of
certain assets of an employment screening business owned by Trans Union, a related party. The warrants have a term of
fifteen years and may be exercised at any time prior to August 12, 2017, for an exercise price of $16.32 per share. A
detailed description of this transaction is contained in Part I, Item 2, "Management's Discussion and Analysis of
Financial Condition and Results of Operation - Liquidity and Capital Resources." The shares and warrants issued to
Trans Union were not registered under the Securities Act of 1933, but rather were issued in reliance upon the
exemption from registration afforded by Section 4(2) thereof. In relying on such exemption, the Company considered
several factors including the sophistication of Trans Union, and the fact that Trans Union represented that it would
hold the shares and warrants for investment purposes and not with a view to further public distribution.
33
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Shareholders of the Company was held on August 7, 2002. At the meeting, the shareholders voted
on the following three proposals:
1) A proposal for the election of four directors - Voting results for each individual nominee were as follows:
General Wesley K. Clark, 79,392,941 votes for and 2,625,868 votes withheld; Mr. William T. Dillard, 79,221,025
votes for and 2,797,784 votes withheld; Mr. Harry C. Gambill, 68,023,314 votes for and 13,995,495 votes
withheld; and Mr. Thomas F. (Mack) McLarty, III, 79,309,564 votes for and 2,709,245 votes withheld. These four
elected directors will serve with the other six Board members: Dr. Ann Hayes Die, Mr. William J. Henderson,
and Mr. Charles D. Morgan, whose terms will expire at the 2003 Annual Meeting and Mr. Rodger S. Kline, Mr.
Stephen M. Patterson, and Mr. James T. Womble, whose terms will expire at the 2004 Annual meeting.
2) A proposal to increase the number of shares available to be issued under the Company's 2000 Associate Stock
Option Plan by 2.0 million shares - Voting results for this proposal were as follows: 60,043,979 votes for;
21,581,304 votes against and 393,526 votes abstained.
3) A stockholder proposal regarding the independence of the Board of Directors' nominating committee - Voting
results for this proposal were as follows: 21,973,808 votes for; 46,400,966 votes against; 422,807 votes
abstained and 13,221,228 non-votes.
34
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are filed with this Report:
10(a) First Amendment to Amended and Restated Credit Agreement, dated as of May 13, 2002.
10(b) Second Amendment to Term Credit Agreement dated as of May 13, 2002 between Acxiom Corporation and JP
Morgan Chase Bank.
10(c) Fifth Amendment to the Participation Agreement and certain operative agreements dated as of February 28,
2002.
10(d) Sixth Amendment to the Participation Agreement and certain operative agreements dated as of May 13, 2002.
10(d) Seventh Amendment to the Participation Agreement and certain operative agreements dated as of October 24,
2002.
99.1 Certification of Company Leader (principal executive officer) pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99.2 Certification of Company Financial Operations Leader (principal financial officer) pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(b) Reports on Form 8-K
Not applicable
35
ACXIOM CORPORATION AND SUBSIDIARIES
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
Acxiom Corporation
Dated: November 12, 2002
By: /s/ Jefferson D. Stalnaker
-----------------------------------------
(Signature)
Jefferson D. Stalnaker
Company Financial Operations Leader
(principal financial and accounting officer)
36
ACXIOM CORPORATION AND SUBSIDIARIES
CERTIFICATION
I, Charles D. Morgan, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Acxiom Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements were made,
not misleading with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of and
for the periods presented in this quarterly report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to
the filing date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures
based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's
auditors and the audit committee of the registrant's board of directors:
a) all significant deficiencies in the design or operation of internal controls which could adversely affect the
registrant's ability to record, process, summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant's internal controls; and
37
6. The registrant's other certifying officer and I have indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and
material weaknesses.
Dated: November 12, 2002
By: /s/ Charles D. Morgan
--------------------------------------------------
(Signature)
Charles D. Morgan
Company Leader
(principal executive officer)
38
ACXIOM CORPORATION AND SUBSIDIARIES
CERTIFICATION
I, Jefferson D. Stalnaker, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Acxiom Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements were made,
not misleading with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of and
for the periods presented in this quarterly report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to
the filing date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures
based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's
auditors and the audit committee of the registrant's board of directors:
a) all significant deficiencies in the design or operation of internal controls which could adversely affect the
registrant's ability to record, process, summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant's internal controls; and
39
6. The registrant's other certifying officer and I have indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and
material weaknesses.
Dated: November 12, 2002
By: /s/ Jefferson D. Stalnaker
-----------------------------------------
(Signature)
Jefferson D. Stalnaker
Company Financial Operations Leader
(principal financial and accounting officer)
40
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are filed with this Report:
10(a) First Amendment to Amended and Restated Credit Agreement, dated as of May 13, 2002.
10(b) Second Amendment to Term Credit Agreement dated as of May 13, 2002 between Acxiom Corporation and JP
Morgan Chase Bank.
10(c) Fifth Amendment to the Participation Agreement and certain operative agreements dated as of February 28,
2002.
10(d) Sixth Amendment to the Participation Agreement and certain operative agreements dated as of May 13, 2002.
10(d) Seventh Amendment to the Participation Agreement and certain operative agreements dated as of October 24,
2002.
99.1 Certification of Company Leader (principal executive officer) pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99.2 Certification of Company Financial Operations Leader (principal financial officer) pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(b) Reports on Form 8-K
Not applicable
EXHIBIT 10(a)
WAIVER AND FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
THIS WAIVER AND FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (the "Amendment"), dated as of
May 13, 2002 is among ACXIOM CORPORATION, a Delaware Corporation (the "Borrower"), the lenders party hereto,
JPMORGAN CHASE BANK, as the agent (the "Agent") and BANK OF AMERICA, N.A., as syndication agent.
RECITALS:
A. The Borrower, the Agent, Bank of America, N.A., as syndication agent, and certain lenders have
entered into that certain Amended and Restated Credit Agreement dated as of January 28, 2002 (as amended or
otherwise modified from time to time, the "Agreement").
B. The Borrower has advised the Agent and the Lenders that certain Defaults and Events of Default
have occurred under clauses (c) and (d) of Article VIII of the Agreement as a result of (a) the Borrower
guaranteeing the obligations of Kidco Holdings, Inc. owing to Mercantile Bank of Arkansas National Association
(as more fully described in paragraph 2 of Exhibit A attached hereto), which guaranty obligations constitute
Indebtedness not permitted by Section 6.01 of the Agreement; (b) the Borrower guaranteeing the obligations of
Cope's Aircraft Services, Inc. owing to First Community Bank (as more fully described in paragraph 3 of Exhibit
A), which guaranty obligations constitute Indebtedness not permitted by Section 6.01 of the Agreement; (c) the
Borrower granting a Lien on substantially all of its personal property to Softech Financial in connection with a
lease agreement in violation of Section 6.02 of the Agreement (as more fully described in paragraph 1 of Exhibit
A); (d) the Borrower's inadvertent failure to disclose at the closing of the Agreement the existence of the
Indebtedness described in paragraphs 2 and 3 of Exhibit A as required by Section 3.04(b) of the Agreement; and
(e) the Borrower's inadvertent failure to disclose at the closing of the Agreement the existence of the Lien
described in paragraph 1 of Exhibit A as required by Section 3.05(a) of the Agreement (the "Existing Defaults"
and the covenants described in this paragraph, herein the "Violated Covenants"). In accordance with the
Agreement, the Borrower has requested that the Required Lenders waive the Existing Defaults.
C. The Borrower has requested that the Agent and the Lenders amend certain provisions of the
Agreement. Subject to satisfaction of the conditions set forth herein, the Agent and the Lenders party hereto
are willing to amend the Agreement as herein set forth.
NOW, THEREFORE, in consideration of the premises herein contained and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows
effective as of the date hereof unless otherwise indicated:
ARTICLE I.
Definitions
Section 1.1. Definitions. Capitalized terms used in this Amendment, to the extent not otherwise defined
herein, shall have the same meanings as in the Agreement, as amended hereby.
1
ARTICLE II.
Amendments
Section 2.1. Amendment to Section 6.01. Clause (a) of Section 6.01 of the Agreement is amended as follows:
(a) The reference to the term "Guaranties" in clause (v) is amended to read as "Guarantees"; and
(b) The period at the end of clause (xii)(D) is replaced with the word "and"; and a new clause (E)
is added to clause (xii) and shall read in its entirety as follows:
(E) Unsecured Indebtedness arising under Guarantees which are not permitted under
clauses (ii), (iv) and (v) of this Section 6.01(a) provided that, after giving proforma effect
to the Indebtedness incurred under the permissions of this clause (xii)(E): (i) the Borrower
shall be in compliance with Section 7.02 as of the most recently ended fiscal quarter of the
Borrower, and (ii) the aggregate amount of Indebtedness incurred under the permissions of this
clause (xii)(E) shall not exceed $4,000,000.
Section 2.2. Amendment to Section 6.05. Clause (d) of Section 6.05 of the Agreement is amended to add the
phrase "no Default exists or would result from such Disposition and" after the word "if" and before the symbol
"(1)" in the second sentence thereof.
Section 2.3. Amendment to Section 7.02. Clause (i) of the definition of "Total Indebtedness" in Section 7.02
of the Agreement is amended in its entirety to read as follows:
(i) all obligations, contingent or otherwise, of such Person: (i) as an account party in respect of letters
of credit and letters of guaranty; (ii) arising under all Guarantees of such Person incurred
under the permissions of Section 6.01(a)(xii)(E); and (iii) arising under the Guarantees of
such Person described under item C on Schedule 6.01;
Section 2.4. Amendment to Schedule 6.01. Schedule 6.01 to the Agreement is amended to add the information
described on Schedule 6.01 hereto.
Section 2.5. Amendment to Schedule 6.02. Schedule 6.02 to the Agreement is amended in its entirety to read
as Schedule 6.02 attached hereto.
ARTICLE III.
Waiver
Section 3.1. Waiver. Subject to the satisfaction of the conditions precedent described in Article IV
hereof, each of the undersigned Lenders waives the Existing Defaults and agrees not to exercise any rights or
remedies available as a result of the occurrence thereof.
Section 3.2. Limitations on Waiver. To induce the Required Lenders to agree to the terms of Section 3.1,
the Borrower agrees that: (a) the Lien described on Schedule 6.02 in the Borrower's assets in favor of
Bankers/Softech Division of EAB Leasing Corp. shall not at any time secure debt or other obligations in an
aggregate amount in excess of $2,000,000; and (b) at no time shall both of the following have occurred: (i)
Bankers/Softech Division of EAB Leasing Corp. or any Affiliate thereof have a perfected security interest in any
2
collateral or asset of the Borrower or any Subsidiary (other than the property that is leased under the
Borrower's lease agreement with EAB Leasing Corp.) and (ii) any judgment have been rendered against the Borrower
or any Subsidiary in favor EAB Leasing Corp. or any of its Affiliates which shall remain undischarged for a
period of five (5) or more Business Days during which execution shall not be effectively stayed, or any action
(including without limitation self-help remedies) shall be legally taken by EAB Leasing Corp. or any of its
Affiliates to attach, seize or levy upon any collateral or assets of the Borrower or any Subsidiary (other than
the property that is leased under the Borrower's lease agreement with EAB Leasing Corp.) to enforce or collect
the obligations of the Borrower or any Subsidiary. Furthermore, the Borrower agrees that the waiver specifically
described herein shall not constitute and shall not be deemed a waiver of any other Default or Event of Default,
whether arising as a result of the further violation the Violated Covenants or otherwise, or a waiver of any
rights or remedies arising as a result of such other Defaults or Events of Default. The failure to comply with
the Violated Covenants at any time other than as described above in the definition of Existing Defaults shall
constitute an Event of Default. The failure of any representation, warranty or certification made or deemed made
by or on behalf of the Borrower in connection with any Loan Document shall prove to have been incorrect any
material respect when made or deemed made shall constitute an Event of Default.
ARTICLE IV.
Miscellaneous
Section 4.1. Ratifications. The terms and provisions set forth in this Amendment shall modify and supersede
all inconsistent terms and provisions set forth in the Agreement and except as expressly modified and superseded
by this Amendment, the terms and provisions of the Agreement and the other Loan Documents are ratified and
confirmed and shall continue in full force and effect. The Borrower, the Agent and the Lenders agree that the
Agreement as amended hereby and the other Loan Documents shall continue to be legal, valid, binding and
enforceable in accordance with their respective terms. For all matters arising prior to the effective date of
this Amendment, the Agreement (as unmodified by this Amendment) shall control.
Section 4.2. Representations and Warranties; Release. The Borrower hereby represents and warrants to the
Agent and the Lenders as follows: (a) after giving effect to this Amendment, no Default or Event of Default
exists; (b) the information contained in Exhibit A hereto is true, correct, and complete, and (c) after giving
effect to this Amendment, the representations and warranties set forth in the Loan Documents are true and correct
on and as of the date hereof with the same effect as though made on and as of such date except with respect to
any representations and warranties limited by their terms to a specific date. IN ADDITION, TO INDUCE THE AGENT
AND THE LENDERS TO AGREE TO THE TERMS OF THIS AMENDMENT, THE BORROWER AND EACH GUARANTOR (BY ITS EXECUTION BELOW)
REPRESENTS AND WARRANTS THAT AS OF THE DATE OF ITS EXECUTION OF THIS AMENDMENT THERE ARE NO CLAIMS OR OFFSETS
AGAINST OR RIGHTS OF RECOUPMENT WITH RESPECT TO OR DEFENSES OR COUNTERCLAIMS TO ITS OBLIGATIONS UNDER THE LOAN
DOCUMENTS AND IN ACCORDANCE THEREWITH IT:
(A) WAIVER. WAIVES ANY AND ALL SUCH CLAIMS, OFFSETS, RIGHTS OF RECOUPMENT, DEFENSES OR COUNTERCLAIMS,
WHETHER KNOWN OR UNKNOWN, ARISING PRIOR TO THE DATE OF ITS EXECUTION OF THIS AMENDMENT AND
(B) RELEASE. RELEASES AND DISCHARGES THE AGENT AND THE LENDERS, AND THEIR RESPECTIVE OFFICERS, DIRECTORS,
3
EMPLOYEES, AGENTS, SHAREHOLDERS, AFFILIATES AND ATTORNEYS (COLLECTIVELY THE "RELEASED PARTIES") FROM ANY AND ALL
OBLIGATIONS, INDEBTEDNESS, LIABILITIES, CLAIMS, RIGHTS, CAUSES OF ACTION OR DEMANDS WHATSOEVER, WHETHER KNOWN OR
UNKNOWN, SUSPECTED OR UNSUSPECTED, IN LAW OR EQUITY, WHICH THE BORROWER OR ANY GUARANTOR EVER HAD, NOW HAS,
CLAIMS TO HAVE OR MAY HAVE AGAINST ANY RELEASED PARTY ARISING PRIOR TO THE DATE HEREOF AND FROM OR IN CONNECTION
WITH THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY.
Section 4.3. Survival of Representations and Warranties. All representations and warranties made in this
Amendment shall survive the execution and delivery of this Amendment, and no investigation by Agent or any Lender
or any closing shall affect the representations and warranties or the right of the Agent or any Lender to rely
upon them.
Section 4.4. Reference to Agreement. Each of the Loan Documents, including the Agreement and any and all
other agreements, documents, or instruments now or hereafter executed and delivered pursuant to the terms hereof
or pursuant to the terms of the Agreement as amended hereby, are hereby amended so that any reference in such
Loan Documents to the Agreement shall mean a reference to the Agreement as amended hereby.
Section 4.5. Expenses of Lender. As provided in the Agreement, Borrower agrees to pay on demand all costs
and expenses incurred by the Agent in connection with the preparation, negotiation, and execution of this
Amendment, including without limitation, the costs and fees of the Agent's legal counsel.
Section 4.6. Severability. Any provision of this Amendment held by a court of competent jurisdiction to be
invalid or unenforceable shall not impair or invalidate the remainder of this Amendment and the effect thereof
shall be confined to the provision so held to be invalid or unenforceable.
Section 4.7. Applicable Law. This Amendment shall be governed by and construed in accordance with the laws
of the State of Texas and the applicable laws of the United States of America.
Section 4.8. Successors and Assigns. This Amendment is binding upon and shall inure to the benefit of the
Agent, each Lender and the Borrower and their respective successors and assigns, except Borrower may not assign
or transfer any of its rights or obligations hereunder without the prior written consent of the Lenders.
Section 4.9. Counterparts. This Amendment may be executed in one or more counterparts and on telecopy
counterparts, each of which when so executed shall be deemed to be an original, but all of which when taken
together shall constitute one and the same agreement.
Section 4.10. Effect of Waiver. No consent or waiver, express or implied, by the Agent or any Lender to or
for any breach of or deviation from any covenant, condition or duty by the Borrower or any Guarantor shall be
deemed a consent or waiver to or of any other breach of the same or any other covenant, condition or duty.
Section 4.11. Headings. The headings, captions, and arrangements used in this Amendment are for convenience
only and shall not affect the interpretation of this Amendment.
4
Section 4.12. ENTIRE AGREEMENT. THIS AMENDMENT EMBODIES THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO
AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR
ORAL, RELATING TO THIS AMENDMENT, AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES
HERETO.
Section 4.13. Required Lenders. The Agreement may be modified as provided in this Amendment with the
agreement of the Required Lenders which means Lenders having fifty-one percent (51%) of the sum of the total
Revolving Exposures and unused Revolving Commitment (such percentage applicable to a Lender, herein such Lender's
"Required Lender Percentage"). For purposes of determining the effectiveness of this Amendment, each Lender's
Required Lender Percentage is set forth on Schedule 4.13 hereto.
Executed as of the date first written above.
ACXIOM CORPORATION, as the Borrower
By: /s/ Dathan A. Gaskill
---------------------------------------
Name: Dathan A. Gaskill
Title: Corporate Finance Leader
5
JPMORGAN CHASE BANK, as the Agent, the Issuing Bank, the
Swingline Lender and as a Lender
By: /s/ Michael J. Lister
---------------------------------------
Michael J. Lister
Vice President
BANK OF AMERICA, N.A., as syndication agent and as a Lender
By: /s/ B. Kenneth Burton, Jr.
---------------------------------------
Name: B. Kenneth Burton, Jr.
Title: Vice President
U.S. BaNK National ASSOCIATION (formerly Firstar Bank N.A.),
as a co-administrative agent and as a Lender
By: /s/ Eric Hartman
---------------------------------------
Name: Eric Hartman
Title: Vice President
THE BANK OF NOVA SCOTIA, as co-agent and as a Lender
By:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
SUNTRUST BANK, as co-agent and as a Lender
By: /s/ Leonard L. McKinnon
---------------------------------------
Name: Leonard L. McKinnon
---------------------------------------
Title: Director
---------------------------------------
WACHOVIA BANK, N.A., as co-agent and as a Lender
By: /s/ Daniel Evans
---------------------------------------
Name: Daniel Evans
---------------------------------------
Title: Managing Director
---------------------------------------
6
ABN AMRO BANK N.V., as co-agent and as a Lender
By: /s/ Maria Vickroy-Peralta
---------------------------------------
Name: Maria Vickroy-Peralta
---------------------------------------
Title: Senior Vice President and Head
---------------------------------------
By: /s/ Xiaochuan Zhang
---------------------------------------
Name: Xiaochuan Zhang
---------------------------------------
Title: Assistant Vice President
---------------------------------------
Union Planters BANK, N.A.
By:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
7
Guarantor Consent
Each of the undersigned Guarantors: (i) consent and agree to this Amendment, including, without
limitation, Section 4.2, and (ii) agree that the Loan Documents to which it is a party shall remain in full force
and effect and shall continue to be the legal, valid and binding obligation of such Guarantor enforceable against
it in accordance with their respective terms.
GUARANTORS:
Acxiom CDC, Inc.
Acxiom / May & Speh, Inc.
Acxiom RM-Tools, Inc.
ACXIOM ASIA, LTD.
ACXIOM PROPERTY DEVELOPMENT, INC.
ACXIOM / PYRAMID INFORMATION SYSTEMS, INC.
ACXIOM SDC, INC.
ACXIOM TRANSPORTATION SERVICES, INC.
ACXIOM / DIRECT MEDIA, INC.
GIS INFORMATION SYSTEMS, INC.
ACXIOM UWS, LTD.
By: /s/ Jerry C. Jones
---------------------------------------
Jerry C. Jones, Authorized Officer
8
SCHEDULE 4.13
to
WAIVER AND FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
Required Lenders
================================================== ========================= =========================================
Lenders Agreeing to First Amendment
(insert % from prior column if Lender
Required Lender signs Amendment then total % in this
Lender Percentage Held column)
================================================== ========================= =========================================
JPMorgan Chase Bank 20.00000000% 20.00000000%
- -------------------------------------------------- ------------------------- -----------------------------------------
U.S. Bank National Association 14.28571429% 14.28571429%
- -------------------------------------------------- ------------------------- -----------------------------------------
Bank of America, N.A. 14.28571429% 14.28571429%
- -------------------------------------------------- ------------------------- -----------------------------------------
ABN AMRO Bank, N.V. 11.42857143% 11.42857143%
- -------------------------------------------------- ------------------------- -----------------------------------------
SunTrust Bank 11.42857143% 11.42857143%
- -------------------------------------------------- ------------------------- -----------------------------------------
The Bank of Nova Scotia 11.42857143%
- -------------------------------------------------- ------------------------- -----------------------------------------
Wachovia Bank, N.A. 14.28571429% 14.28571429%
- -------------------------------------------------- ------------------------- -----------------------------------------
Union Planters Bank, N.A. 2.85714286%
- -------------------------------------------------- ------------------------- -----------------------------------------
TOTAL 100.00% 85.7136286%
================================================== ========================= =========================================
SCHEDULE 6.01
to
Waiver and First Amendment to Amended and Restated Credit Agreement
C. Guarantees
1. Acxiom Corporation entered into that certain Continuing Payment and Performance Guaranty dated as of
October 30, 1998, as amended, pursuant to which Acxiom Corporation unconditionally guaranteed the
obligation of Kidco Holdings, LLC ("Kidco") to make timely payments of the principal amount owed, plus
accrued interest, when the same become due, under that certain Promissory Note, dated as of October 30,
1998, as amended, between Mercantile Bank of Arkansas National Association, as lender, and Kidco, as
borrower, in the principal amount of $1,184,500.00. As of March 22, 2002, the balance of such loan was
$1,138,176.00. It is currently contemplated that Kidco's obligations under the Promissory Note
referenced above will be refinanced at a new financial institution. Therefore, as a result of such
re-financing, each of the above-referenced Payment and Performance Guarantee and Promissory Note will be
restated in its entirety; provided, that the outstanding balance of the refinanced Promissory Note (and
resulting guarantee obligations of Acxiom Corporation) will not exceed in the aggregate $1,184,500.
2. Acxiom Corporation entered into a guaranty arrangement with First Community Bank ("First Community")
pursuant to which Acxiom Corporation guaranteed the obligation of Cope's Aircraft Services, Inc.
("Cope's") to make timely payments of the principal amount owed, when the same become due, under a loan
arrangement from First Community to Cope's in the principal amount of $280,000.00. As of February 13,
2002, the balance of such loan was $238,916.65.
SCHEDULE 6.02
to
Waiver and First Amendment to Amended and Restated Credit Agreement
Existing Liens
1. Liens relating to the Indebtedness described in Schedule 6.01
2. Liens against assets and capital stock of Acxiom CDC, Inc. in favor of Trans Union LLC to secure
performance of services (UCC-1 originally filed August 31, 1992; continuation filed March 12, 1997)
3. Liens against assets and capital stock of Acxiom Corporation in favor of Bankers/Softech Division of EAB
Leasing Corp.
EXHIBIT A
to
Waiver and First Amendment to Amended and Restated Credit Agreement
Existing Defaults
1. Acxiom Corporation entered into a lease agreement, dated as of September 22, 1999, with Softech
Financial ("Softech") pursuant to which Acxiom Corporation granted to Softech a security interest in
substantially all of the personal property of Acxiom Corporation. The debt or other obligations secured by such
security interest does not exceed a maximum amount equal to $2,000,000.
2. Acxiom Corporation entered into that certain Continuing Payment and Performance Guaranty dated as of
October 30, 1998, as amended, pursuant to which Acxiom Corporation unconditionally guaranteed the obligation of
Kidco Holdings, LLC ("Kidco") to make timely payments of the principal amount owed, plus accrued interest, when
the same become due, under that certain Promissory Note, dated as of October 30, 1998, as amended, between
Mercantile Bank of Arkansas National Association, as lender, and Kidco, as borrower, in the principal amount of
$1,184,500.00. As of March 22, 2002, the balance of such loan was $1,138,176.00. It is currently contemplated
that Kidco's obligations under the Promissory Note referenced above will be refinanced at a new financial
institution. Therefore, as a result of such re-financing, each of the above-referenced Payment and Performance
Guarantee and Promissory Note will be restated in its entirety; provided, that the outstanding balance of the
refinanced Promissory Note (and resulting guarantee obligations of Acxiom Corporation) will not exceed in the
aggregate $1,184,500.
3. Acxiom Corporation entered into a guaranty arrangement with First Community Bank ("First Community")
pursuant to which Acxiom Corporation guaranteed the obligation of Cope's Aircraft Services, Inc. ("Cope's") to
make timely payments of the principal amount owed, when the same become due, under a loan arrangement from First
Community to Cope's in the principal amount of $280,000.00. As of February 13, 2002, the balance of such loan was
$238,916.65.
EXHIBIT 10(b)
SECOND AMENDMENT TO TERM CREDIT AGREEMENT
This Second Amendment to Term Credit Agreement (this "Second Amendment"), dated as of May 13, 2002, is
by and between Acxiom Corporation, a Delaware corporation (the "Borrower") and JPMorgan Chase Bank, successor in
interest by merger to The Chase Manhattan Bank (the "Lender").
W I T N E S S E T H:
WHEREAS, the Borrower and the Lender are parties to that certain Term Credit Agreement dated as of
September 21, 2001 (as amended or otherwise modified from time to time, the "Credit Agreement") (unless otherwise
defined herein, all terms used herein with their initial letter capitalized shall have the meaning given such
term in the Credit Agreement); and
WHEREAS, pursuant to the Credit Agreement, the Lender has made the Loan to the Borrower; and
WHEREAS, the Borrower has advised the Lender that certain Defaults and Events of Default have occurred
under clauses (c) and (d) of Article VIII of the Credit Agreement as a result of (a) the Borrower guaranteeing
the obligations of Kidco Holdings, Inc. owing to Mercantile Bank of Arkansas National Association (as more fully
described in paragraph 2 of Exhibit A attached hereto), which guaranty obligations constitute Indebtedness not
permitted by Section 6.01 of the Credit Agreement; (b) the Borrower guaranteeing the obligations of Cope's
Aircraft Services, Inc. owing to First Community Bank (as more fully described in paragraph 3 of Exhibit A),
which guaranty obligations constitute Indebtedness not permitted by Section 6.01 of the Credit Agreement; (c) the
Borrower granting a Lien on substantially all of its personal property to Softech Financial in connection with a
lease agreement in violation of Section 6.02 of the Credit Agreement (as more fully described in paragraph 1 of
Exhibit A); (d) the Borrower's inadvertent failure to disclose at the closing of the Revolving Credit Agreement
and the First Amendment the existence of the Indebtedness described in paragraphs 2 and 3 of Exhibit A as
required by Section 3.04(b) of the Credit Agreement; and (e) the Borrower's inadvertent failure to disclose at
the closing of the Revolving Credit Agreement and the First Amendment the existence of the Lien described in
paragraph 1 of Exhibit A as required by Section 3.05(a) of the Credit Agreement (the "Existing Defaults" and the
covenants described in this paragraph, herein the "Violated Covenants"), and, in accordance with the Credit
Agreement, the Borrower has requested that the Lender waive the Existing Defaults; and
WHEREAS, the Borrower has further requested that the Lender amend certain provisions of the Credit
Agreement, and, subject to satisfaction of the conditions set forth herein, the Lender is willing to amend the
Credit Agreement as herein set forth.
NOW, THEREFORE, in consideration of the premises herein contained and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows
effective as of the date hereof unless otherwise indicated:
Section 1. Amendments. In reliance on the representations, warranties, covenants and agreements contained
in this Second Amendment, and subject to the terms and conditions contained herein, the Credit Agreement is
hereby amended effective as of the date hereof in the manner provided in this Section 1.
1
1.1 Additional Definition. Section 1.01 of the Credit Agreement is amended to add thereto in alphabetical
order the definition of "Second Amendment" which shall read in full as follows:
"Second Amendment" means that certain Second Amendment to Term Credit Agreement dated as of
May 13, 2002, between the Borrower and the Lender.
1.2 Amendments to Definitions. The definitions of "Intercreditor Agreement" and "Loan Documents" set forth
in Section 1.01 of the Credit Agreement are amended to read in full as follows:
"Intercreditor Agreement" means that certain Intercreditor Agreement, dated as of September 21,
2001, executed by and among the Borrower, the Guarantors, the Collateral Agent, the Revolver Agent, Bank of
America, N.A., as agent for the participants in the Synthetic Real Property Lease, the Lender and the Letter of
Credit Bank, as amended by that certain First Amendment to Intercreditor Agreement dated as of January 28, 2002,
and Second Amendment to Intercreditor Agreement dated as of May 13, 2002, and as the same may be further amended
or otherwise modified.
"Loan Documents" means this Agreement, the First Amendment, the Second Amendment, the Term
Notes, the Subsidiary Guaranty, the Security Agreement, the Mortgages, the Intercreditor Agreement and all other
certificates, agreements and other documents or instruments now or hereafter executed and/or delivered pursuant
to or in connection with the foregoing and any and all amendments, modifications, supplements, renewals,
extensions or restatements thereof.
1.3 Amendment to Debt Covenant. Section 6.01(a) of the Credit Agreement is amended to read in full as
follows:
"(a) The Borrower will not, and will not permit any Subsidiary to, create,
incur, assume or permit to exist any Indebtedness, except:
(i) Indebtedness created under the Loan Documents and the Subordinated
Debt Documents;
(ii) Indebtedness existing on January 28, 2002 and set forth in
Schedule 6.01 and extensions, renewals and replacements of any such
Indebtedness that do not increase the outstanding principal amount
2
thereof or result in an earlier maturity date or decreased weighted average
life thereof; provided, that, the Indebtedness outstanding under or in
respect of the Senior Notes, the letter of credit securing the payment
thereof, and the May & Speh Notes is not permitted after May 31, 2002;
(iii)Indebtedness owed by a Subsidiary to the Borrower or owed by a
Subsidiary to its parent incurred in accordance with the restrictions
set forth in Section 6.04; provided that (A) the obligations of each
obligor of such Indebtedness must be subordinated in right of payment
to any liability such obligor may have for the obligations arising
hereunder from and after such time as any portion of the obligations
arising hereunder or under any other Loan Documents shall become due
and payable (whether at stated maturity, by acceleration or
otherwise), (B) such Indebtedness must be incurred in the ordinary
course of business or incurred to finance general corporate needs,
(C) such Indebtedness must be provided on terms customary for
intercompany borrowings among the Borrower and the Subsidiaries or
must be made on such other terms and provisions as the Lender may
reasonably require, and (D) the sum of the aggregate outstanding
amount of the obligations of Excluded Subsidiaries guaranteed pursuant
to clause 1.6(iv) below plus the aggregate outstanding principal
amount of the loans and advances made to Excluded Subsidiaries by the
Borrower and the Subsidiaries (such sum the "Excluded Subsidiary Loan
and Guaranty Amount") shall not at any time exceed the Dollar Amount
equal to $20,000,000 (the "Excluded Subsidiary Loan and Guaranty
Limit");
(iv) Guarantees by the Borrower or a Subsidiary of (A) Indebtedness of any
of its wholly owned direct Subsidiaries; (B) trade accounts payable
owed by any of its wholly owned direct Subsidiaries and arising in the
ordinary course of business; or (C) operating leases of any of its
wholly owned direct Subsidiaries entered into in the ordinary course
of business; provided that: (1) the Indebtedness guaranteed is
otherwise permitted hereunder; (2) no Default exists or would result
from such Guarantee; and (3) the Excluded Subsidiary Loan and Guaranty
Amount shall not exceed the Excluded Subsidiary Loan and Guaranty
Limit;
(v) Guarantees incurred in the ordinary course of business with respect to
surety and appeal bonds, performance and return-of-money bonds, and
other similar obligations not exceeding at any time outstanding a
Dollar Amount equal to $5,000,000 in aggregate liability;
(vi) Indebtedness constituting obligations to reimburse worker's
compensation insurance companies for claims paid by such companies on
the Borrower's or a Subsidiaries' behalf in accordance with the
policies issued to the Borrower and the Subsidiaries;
(vii)Indebtedness arising in connection with Hedging Agreements entered
into in the ordinary course of business to enable the Borrower or a
Subsidiary (A) to limit the market risk of holding currency in either
the cash or futures market, or (B) to fix or limit the Borrower's or
any Subsidiaries' interest expense;
(viii) the obligations arising under the Synthetic Real Property Lease, the
Synthetic Airplane Lease Facility and the Synthetic Equipment Lease
Facility; provided, however, notwithstanding anything to the contrary
herein or in the Revolving Credit Agreement, the amount of funding for
construction after August 14, 2001 under the Synthetic Real Property
Lease (excluding any fundings for construction under the Synthetic
Real Property Lease prior to August 14, 2001) shall not, at any time,
exceed $26,000,000 in aggregate amount;
3
(ix) Indebtedness arising in connection with preferred Equity Interest
permitted to be issued in accordance with Section 6.01(b);
(x) Indebtedness for borrowed money not otherwise permitted under this
Section 6.01 of any Excluded Subsidiary provided that the aggregate
outstanding amount of all such Indebtedness shall not at any time
exceed the Dollar Amount equal to $5,000,000;
(xi) Indebtedness arising as a result of the licensing of software by the
Borrower and the Subsidiaries; and
(xii)the following Indebtedness which may only be created, incurred,
assumed or permitted to exist if no Default exists or would result
therefrom:
(A) Indebtedness of the Borrower or any Subsidiary incurred to
finance the acquisition, construction or improvement of any fixed
or capital assets (but excluding the acquisition of assets which
constitute a business unit of a Person), including Capital Lease
Obligations and any Indebtedness assumed in connection with the
acquisition of any such assets or secured by a Lien on any such
assets prior to the acquisition thereof, and extensions, renewals
and replacements of any such Indebtedness that do not increase
the outstanding principal amount thereof or result in an earlier
maturity date or decreased weighted average life thereof;
provided that (1) such Indebtedness (other than any Indebtedness
incurred in connection with any sale and leaseback transactions
permitted hereby) is incurred prior to or within 90 days after
such acquisition or the completion of such construction or
improvement; (2) such Indebtedness does not exceed the amount of
the purchase price or the costs of construction or improvement,
as the case may be, of the applicable asset; and (3) after giving
proforma effect to such Indebtedness, the Borrower shall be in
compliance with Section 7.02 as of the most recently ended fiscal
quarter of the Borrower;
(B) Indebtedness (including Capital Lease Obligations) of the
Borrower incurred to refinance the Conway Facility and
extensions, renewals and replacements of any such Indebtedness
that do not increase the outstanding principal amount thereof or
result in an earlier maturity date or decreased weighted average
life thereof; provided that (1) the aggregate principal amount
thereof does not exceed $45,000,000; (2) such Indebtedness does
not exceed the appraised value of the Conway Facility; (3) the
maturity date of such Indebtedness does not occur prior to the
Maturity Date; (4) after giving proforma effect to such
4
Indebtedness, the Borrower shall be in compliance with Section
7.02 as of the most recently ended fiscal quarter of the
Borrower; and (5) the Borrower shall comply with Section 6.06 in
connection with the Net Proceeds of such financing;
(C) Indebtedness of any Person that becomes a Subsidiary after the
date hereof or is merged with or into the Borrower or a
Subsidiary in accordance with the permissions herein set forth;
provided that (1) such Indebtedness exists at the time such
Person becomes a Subsidiary or was so merged and is not created
in contemplation of or in connection with such Person becoming a
Subsidiary or merger; and (2)after giving proforma effect to such
Indebtedness and the EBITDAR of the Person who became a
Subsidiary, the Borrower shall be in compliance with Section 7.02
as of the most recently ended fiscal quarter of the Borrower;
(D) unsecured Indebtedness of the Borrower and of the Guarantors of
the type described in clauses (a), (b), (c), (e), and (l) of the
definition thereof, in addition to the Indebtedness permitted by
clauses (i) through (xi) of this Section 6.01(a) and the
foregoing clauses (A), (B), and (C); provided, that, after giving
proforma effect to the Indebtedness incurred under the
permissions of this clause (xii)(D), the Borrower shall be in
compliance with Section 7.02 as of the most recently ended fiscal
quarter of the Borrower and no Default shall exist as result
therefrom; and
(E) unsecured Indebtedness arising under Guarantees which are not
permitted under clauses (ii), (iv) and (v) of this
Section 6.01(a) provided that, after giving proforma effect to
the Indebtedness incurred under the permissions of this clause
(xii)(E): (i) the Borrower shall be in compliance with
Section 7.02 as of the most recently ended fiscal quarter of the
Borrower, and (ii) the aggregate amount of Indebtedness incurred
under the permissions of this clause (xii)(E) shall not exceed
$4,000,000."
1.4 Amendment to Asset Sales Covenant. Section 6.05(d) of the Credit Agreement is amended to read in full
as follows:
"(d) sales, transfers and other dispositions of assets that are not permitted by
any other clause of this Section 6.05 (such other sales, transfers and other dispositions
herein the "Dispositions"), if: (i) no Default exists or would result therefrom and (ii) after
giving effect to such Disposition, the aggregate book value of all such assets sold,
transferred or otherwise disposed of since January 28, 2002, under the permissions of this
Section 6.05(d) would not exceed a Dollar Amount equal to the greater of (1) $45,000,000, or
5
(2) twelve percent (12%) of the Accumulated Asset Value, calculated as of the date of the
Disposition. Notwithstanding the foregoing, the Borrower may make a Disposition and the book
value of the assets shall not be required to be included in the foregoing computation if no
Default exists or would result from such Disposition and (A) such Disposition is pursuant to
the Synthetic Equipment Lease Facility, Synthetic Real Property Lease or another sale and
leaseback transaction permitted under Section 6.06, or (B) the Borrower shall, within 180 days
after such Disposition, invest the Net Proceeds thereof in Collateral for use in the business
of the Borrower and the Subsidiaries;
provided that all sales, transfers, leases and other dispositions permitted hereby (other than
those permitted by Section 6.05(b) above) shall be made for fair value. For purposes of this
Section 6.05, "Accumulated Asset Value" means, as of the date of determination, the sum of
(a) the Asset Value (as defined in Section 7.04) as of December 31, 2001 plus (b) the increases
(or minus the decreases) in the Asset Value since December 31, 2001 as reflected in the
Borrower's consolidated balance sheet for each completed calendar year occurring subsequent to
December 31, 2001 prior to the date of determination."
1.5 Amendment to Leverage Ratio Covenant. The definition of "Total Indebtedness" contained in Section 7.02
of the Credit Agreement is amended to read in full as follows:
"Total Indebtedness" means, at the time of determination, the sum of the following
determined for the Borrower and the Subsidiaries on a consolidated basis (without
duplication): (a) the amount of the outstanding principal balance of the Loan under this
Agreement as of the date of determination; plus (b) all obligations for borrowed money, other
than the Loan, or with respect to deposits or advances of any kind; plus (c) all obligations of
such Person evidenced by bonds, notes, debentures, or other similar instruments, other than the
Loan; plus (d) all obligations of such Person upon which interest charges are customarily paid,
other than the Loan; plus (e) all obligations of such Person under conditional sale or other
title retention agreements relating to property acquired by such Person; plus (f) all
obligations of such Person in respect of the deferred purchase price of property or services
(excluding current accounts payable incurred in the ordinary course of business); plus (g) all
obligations of others secured by (or for which the holder of such obligations has an existing
right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by
such Person, whether or not the obligations secured thereby have been assumed (provided that
for purposes of this clause (g) the amount of any such Indebtedness shall be deemed not to
exceed the higher of the market value or the book value of such assets); plus (h) all Capital
Lease Obligations; plus (i) all obligations, contingent or otherwise, of such Person: (1) as an
account party in respect of letters of credit and letters of guaranty; (2) arising under all
Guarantees of such Person incurred under the permissions of Section 6.01(a)(xii)(E); and
(3) arising under the Guarantees of such Person described under item C on Schedule 6.01; plus
(j) all obligations, contingent or otherwise, of such Person in respect of bankers' acceptances;
plus (k) all obligations, contingent or otherwise, for the payment of money under any
6
non-compete, consulting or similar agreement entered into with the seller of a Target or any
other similar arrangements providing for the deferred payment of the purchase price for an
acquisition; plus (l) all Indebtedness arising in connection with Hedging Agreements and
preferred Equity Interests; plus (m) the net present value of all future payments to be made
under all Synthetic Leases (excluding the Synthetic Real Property Lease) and any other
operating leases (calculated by discounting all payments from their respective due dates to the
date of determination in accordance with accepted financial practice, on the basis of a 360-day
year and at a discount factor equal to 8%); plus (n) the total outstanding fundings under the
Synthetic Real Property Lease; minus (o) to the extent included in clauses (a) through (n) of
this definition, the amount reflected on the Borrower's consolidated balance sheet as software
license liabilities; minus (p) the actual outstanding principal amount of the May & Speh Notes
and the Senior Notes; provided that, in determining "Total Indebtedness," the amounts described
in clause (p) shall only be subtracted if "Total Indebtedness" is being calculated during the
period after the Borrower has received the proceeds of the Subordinated Debt but prior to the
earlier of (i) the first date when the May & Speh Notes are required to be redeemed and the
Senior Notes prepaid as determined herein, or (ii) the first date when the May & Speh Notes are
actually redeemed or converted in full and the Senior Notes actually prepaid either directly or
as a result of a draw on the letter of credit securing the payment thereof. The deferred
purchase price of property or services to be paid through earnings of the purchaser to the
extent such amount is not characterized as liabilities in accordance with GAAP shall not be
included in "Total Indebtedness."
1.6 Revised Schedules. Schedules 6.01 and 6.02 of the Credit Agreement shall be replaced in their entirety
with Schedules 6.01 and 6.02 attached hereto and made a part hereof.
Section 2. Limited Waiver and Consent. In reliance on the representations, warranties, covenants and
agreements contained in this Second Amendment, the Lender hereby waives the Existing Defaults (such waiver being
referred to herein as the "Limited Waiver"); provided, that the Limited Waiver is expressly limited as follows:
(x) such waiver is limited solely to the Limited Waiver, (y) such Limited Waiver shall not be applicable to any
provision of any Loan Document other than as expressly set forth herein, and (z) such Limited Waiver is a
limited, one-time waiver and nothing contained herein shall obligate the Lender to grant any additional or future
waiver with respect to any provision of any Loan Document. Additionally, to induce the Lender to grant such
Limited Waiver, the Borrower agrees that: (a) the Lien described on Schedule 6.02 in the Borrower's assets in
favor of Bankers/Softech Division of EAB Leasing Corp. shall not at any time secure debt or other obligations in
an aggregate amount in excess of $2,000,000; and (b) at no time shall both of the following have occurred: (i)
Bankers/Softech Division of EAB Leasing Corp. or any Affiliate thereof have a perfected security interest in any
collateral or asset of the Borrower or any Subsidiary (other than the property that is leased under the
Borrower's lease agreement with EAB Leasing Corp.) and (ii) any judgment have been rendered against the Borrower
or any Subsidiary in favor EAB Leasing Corp. or any of its Affiliates which shall remain undischarged for a
period of five (5) or more Business Days during which execution shall not be effectively stayed, or any action
(including without limitation self-help remedies) shall be legally taken by EAB Leasing Corp. or any of its
Affiliates to attach, seize or levy upon any collateral or assets of the Borrower or any Subsidiary (other than
7
the property that is leased under the Borrower's lease agreement with EAB Leasing Corp.) to enforce or collect
the obligations of the Borrower or any Subsidiary. Furthermore, the Borrower agrees that the waiver specifically
described herein shall not constitute and shall not be deemed a waiver of any other Default or Event of Default,
whether arising as a result of the further violation the Violated Covenants or otherwise, or a waiver of any
rights or remedies arising as a result of such other Defaults or Events of Default. The failure to comply with
the Violated Covenants at any time other than as described above in the definition of Existing Defaults shall
constitute an Event of Default. The failure of any representation, warranty or certification made or deemed made
by or on behalf of the Borrower in connection with any Loan Document shall prove to have been incorrect in any
material respect when made or deemed made shall constitute an Event of Default.
Section 3. Conditions Precedent. The amendments to the Credit Agreement contained in Section 1 hereof
shall become effective as of the date hereof (herein referred to as the "Effective Date") provided each of the
following conditions is satisfied (or waived in writing by the Lender), on or prior to such date:
3.1 Amendment. The Lender (or its counsel) shall have received from the Borrower and each Guarantor a
counterpart of this Second Amendment signed on behalf of such party.
3.2 Amendment to Intercreditor Agreement. The Lender shall have received from each required party thereto
either (a) a counterpart of that certain Second Amendment to Intercreditor Agreement, signed on behalf of each
such required party, or (b) written evidence satisfactory to the Lender that each such party has signed a
counterpart of such amendment.
3.3 Revolving Credit Agreement. The Lender shall have received a fully executed copy of that certain Waiver
and First Amendment to Amended and Restated Credit Agreement (or written evidence satisfactory to the Lender that
such agreement has been fully executed).
3.4 Fees and Expenses. The Lender shall have received all fees and other amounts due and payable on or
prior to the Effective Date, including, to the extent invoiced, reimbursement or payment of all out-of-pocket
expenses (including fees, charges and disbursements of counsel) required to be reimbursed or paid by the Borrower
hereunder or under any other Loan Document.
3.5 Representations and Warranties. The representations and warranties of the Borrower set forth in
Section 4 hereof shall be true and correct.
3.6 No Default. After giving effect to the amendments set forth in Section 1 hereof, and the Limited Waiver
set forth in Section 2 hereof, no Default shall have occurred and be continuing.
The Lender shall notify the Borrower of the Effective Date, and such notice shall be conclusive and binding.
8
Section 4.Representations and Warranties of the Borrower. To induce the Lender to enter into this Second
Amendment, the Borrower hereby represents and warrants to the Lender as follows:
4.1 Reaffirmation of Representations and Warranties. Each representation and warranty of the Borrower and
each Guarantor contained in the Credit Agreement and the other Loan Documents is true and correct on the date
hereof after giving effect to the amendments set forth in Section 1 hereof and the Limited Waiver set forth in
Section 2 hereof.
4.2 Due Authorization, No Conflicts. The execution, delivery and performance by the Borrower of this Second
Amendment are within the Borrower's corporate powers, have been duly authorized by necessary action, require no
action by or in respect of, or filing with, any governmental body, agency or official and do not violate or
constitute a default under any provision of applicable law or any material agreement binding upon the Borrower or
its Subsidiaries, or result in the creation or imposition of any Lien upon any of the assets of the Borrower or
its Subsidiaries except to the extent permitted by the Loan Documents.
4.3 Validity and Binding Effect. This Second Amendment constitutes the valid and binding obligations of the
Borrower enforceable in accordance with its terms, except as (a) the enforceability thereof may be limited by
bankruptcy, insolvency or similar laws affecting creditor's rights generally, and (b) the availability of
equitable remedies may be limited by equitable principles of general application.
4.4 No Defenses. The Borrower has no defenses to payment, counterclaim or rights of set-off with respect to
the indebtedness, obligations and liabilities of the Borrower under the Loan Documents existing on the date
hereof.
4.5 Absence of Defaults. After giving effect to the amendments set forth in Section 1 hereof, and the
Limited Waiver set forth in Section 2 hereof, neither a Default nor an Event of Default has occurred which is
continuing.
Section 5. Miscellaneous.
5.1 Reaffirmation of Loan Documents. Any and all of the terms and provisions of the Credit Agreement and
the other Loan Documents shall, except as amended and modified hereby, remain in full force and effect. The
Borrower hereby agrees that the amendments and modifications herein contained shall in no manner adversely affect
or impair the indebtedness, obligations and liabilities of the Borrower under the Loan Documents.
5.2 Parties in Interest. All of the terms and provisions of this Second Amendment shall bind and inure to
the benefit of the parties hereto and their respective successors and assigns.
5.3 Counterparts. This Second Amendment may be executed in counterparts, and all parties need not execute
the same counterpart; however, no party shall be bound by this Second Amendment until counterparts hereof have
been executed by the Borrower and the Lender. Facsimiles shall be effective as originals.
9
5.4 Complete Agreement. THIS SECOND AMENDMENT, THE CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT
THE FINAL AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN
ORAL AGREEMENTS BETWEEN OR AMONG THE PARTIES.
5.5 Headings. The headings, captions and arrangements used in this Second Amendment are, unless specified
otherwise, for convenience only and shall not be deemed to limit, amplify or modify the terms of this Second
Amendment, nor affect the meaning thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to be duly executed by their
respective authorized officers on the date and year first above written.
[Signature Pages Follow]
10
SIGNATURE PAGE
TO
SECOND AMENDMENT TO TERM CREDIT AGREEMENT
BY AND BETWEEN
ACXIOM CORPORATION
AND JPMORGAN CHASE BANK
[Signature Page]
ACXIOM CORPORATION
By: /S/ DATHAN A. GASKILL
----------------------------------
Name: Dathan A. Gaskill
Title: Corporate Finance Leader
JPMORGAN CHASE BANK
By: /S/ ALLEN K. KING
----------------------------------
Name: Allen K. King, Vice President
By: JP Morgan Chase Bank
Guarantor Consent
Each of the undersigned Guarantors (i) consent and agree to this Second Amendment, and (ii) agree that
the Loan Documents to which it is a party shall remain in full force and effect and shall continue to be the
legal, valid and binding obligation of such Guarantor enforceable against it in accordance with their respective
terms.
ACXIOM ASIA, LTD.
ACXIOM CDC, INC.
ACXIOM/DIRECT MEDIA, INC.
ACXIOM/MAY & SPEH, INC.
ACXIOM PROPERTY DEVELOPMENT, INC.
ACXIOM/PYRAMID INFORMATION SYSTEMS, INC.
ACXIOM RM-TOOLS, INC.
ACXIOM SDC, INC.
ACXIOM TRANSPORTATION SERVICES, INC.
GIS INFORMATION SYSTEMS, INC.
ACXIOM UWS, LTD.
By: /S/ DATHAN A. GASKILL
-------------------------------------------
Dathan A. Gaskill, Vice President and
Assistant Treasurer of all Guarantors
EXHIBIT A
to
Second Amendment to Term Credit Agreement
Existing Defaults
1. Acxiom Corporation entered into a lease agreement, dated as of September 22, 1999, with Softech
Financial ("Softech") pursuant to which Acxiom Corporation granted to Softech a security interest in
substantially all of the personal property of Acxiom Corporation. The debt or other obligations secured by such
security interest does not exceed a maximum amount equal to $2,000,000.
2. Acxiom Corporation entered into that certain Continuing Payment and Performance Guaranty dated as of
October 30, 1998, as amended, pursuant to which Acxiom Corporation unconditionally guaranteed the obligation of
Kidco Holdings, LLC ("Kidco") to make timely payments of the principal amount owed, plus accrued interest, when
the same become due, under that certain Promissory Note, dated as of October 30, 1998, as amended, between
Mercantile Bank of Arkansas National Association, as lender, and Kidco, as borrower, in the principal amount of
$1,184,500.00. As of March 22, 2002, the balance of such loan was $1,138,176.00. It is currently contemplated
that Kidco's obligations under the Promissory Note referenced above will be refinanced at a new financial
institution. Therefore, as a result of such re-financing, each of the above-referenced Payment and Performance
Guarantee and Promissory Note will be restated in its entirety; provided, that the outstanding balance of the
refinanced Promissory Note (and resulting guarantee obligations of Acxiom Corporation) will not exceed in the
aggregate $1,184,500.
3. Acxiom Corporation entered into a guaranty arrangement with First Community Bank ("First Community")
pursuant to which Acxiom Corporation guaranteed the obligation of Cope's Aircraft Services, Inc. ("Cope's") to
make timely payments of the principal amount owed, when the same become due, under a loan arrangement from First
Community to Cope's in the principal amount of $280,000.00. As of February 13, 2002, the balance of such loan was
$238,916.65.
A-1
SCHEDULE 6.01
to
ACXIOM CORPORATION
TERM CREDIT AGREEMENT
Existing Indebtedness and Preferred Equity Interest
A. Existing Indebtedness
======= ========================================== ===================== =============================================
Principal
Outstanding as of
Description December 31, 2001 Liens
======= ========================================== ===================== =============================================
1. Subordinated Debt Not to exceed Unsecured
$205,000,000
(outstanding as of
the Effective Date
of the First
Amendment)
======= ========================================== ===================== =============================================
2. May & Speh Notes $114,998,000 Unsecured
------- ------------------------------------------ --------------------- ---------------------------------------------
3. 6.92% Senior Notes due March 30, 2007 $25,714,286 Secured pursuant to Intercreditor Agreement
------- ------------------------------------------ --------------------- ---------------------------------------------
4. Revolver Debt $175,000,000 1 Secured pursuant to Intercreditor Agreement
------- ------------------------------------------ --------------------- ---------------------------------------------
5. Capital Lease Obligations $13,248,000 Secured by Lien on land located in Downers
Grove, Illinois and the related building
and other related real and personal
property assets of Acxiom/May & Speh, Inc.
------- ------------------------------------------ --------------------- ---------------------------------------------
6. Software license liabilities $89,655,000 Interest is software licenses arising under
related agreements.
------- ------------------------------------------ --------------------- ---------------------------------------------
7. Construction loan $9,211,000 Secured by Lien on land located in Conway,
Arkansas and the related building and other
related real and personal assets of Borrower
------- ------------------------------------------ --------------------- ---------------------------------------------
8. Mortgage loan $2,059,000 Secured by Lien on land located in Conway,
Arkansas and the related building and other
related real and personal assets of Borrower
------- ------------------------------------------ --------------------- ---------------------------------------------
9. Aircraft lease Agreement with General $11,222,000 2 Secured by Lien on Aircraft (as defined in
Electric Capital Corporation the Aircraft Lease Agreement)
------- ------------------------------------------ --------------------- ---------------------------------------------
10. Other capital leases, debt and long-term $668,000 Secured by various Liens on assets of
liabilities Borrower and/or its Subsidiaries with a
book value of less than $500,000.
------- ------------------------------------------ --------------------- ---------------------------------------------
11. Synthethic lease with General Electric $159,699,0002 Secured by liens on equipment
Capital Corporation
------- ------------------------------------------ --------------------- ---------------------------------------------
12. Chenal Joint Venture building loan to $8,457,000 Secured by lien on Chenal building
partnership in which Borrower is a
general partner
------- ------------------------------------------ --------------------- ---------------------------------------------
Page 6.01 - 1
13. Riverdale Joint Venture building loan $4,554,000 Secured by lien on Acxiom Plaza building
partnership in which Borrower is a (amount represents total loan)
general partner
------- ------------------------------------------ --------------------- ---------------------------------------------
14. Outstanding letters of credit $10,658,000 unsecured
------- ------------------------------------------ --------------------- ---------------------------------------------
15. Capital Lease obligations resulting from $4,035,000; balance Secured by liens on equipment underlying
refinancing of sale-leaseback is expected to lease.
transaction with Technology Investment increase to no more
Partners, LLC than $18,000,000
upon receiving
remaining funding
======= ========================================== ===================== =============================================
- --------
1 Amount represents total commitment under Revolving Credit Agreement.
2 Amount represents total amount drawn through December 31, 2001.
B. Preferred Equity Interests.
1. Acxiom CDC, Inc. has issued an outstanding 60 shares of preferred stock (50 shares issued to
Borrower and 10 shares to Trans Union LLC). All outstanding common and preferred stock of Acxiom CDC, Inc. has
been pledged to Trans Union LLC.
C. Guarantees
1. Acxiom Corporation entered into that certain Continuing Payment and Performance Guaranty dated
as of October 30, 1998, as amended, pursuant to which Acxiom Corporation unconditionally guaranteed the
obligation of Kidco Holdings, LLC ("Kidco") to make timely payments of the principal amount owed, plus accrued
interest, when the same become due, under that certain Promissory Note, dated as of October 30, 1998, as amended,
between Mercantile Bank of Arkansas National Association, as lender, and Kidco, as borrower, in the principal
amount of $1,184,500.00. As of March 22, 2002, the balance of such loan was $1,138,176.00. It is currently
contemplated that Kidco's obligations under the Promissory Note referenced above will be refinanced at a new
financial institution. Therefore, as a result of such re-financing, each of the above-referenced Payment and
Performance Guarantee and Promissory Note will be restated in its entirety; provided, that the outstanding
balance of the refinanced Promissory Note (and resulting guarantee obligations of Acxiom Corporation) will not
exceed in the aggregate $1,184,500.
2. Acxiom Corporation entered into a guaranty arrangement with First Community Bank ("First
Community") pursuant to which Acxiom Corporation guaranteed the obligation of Cope's Aircraft Services, Inc.
("Cope's") to make timely payments of the principal amount owed, when the same become due, under a loan
arrangement from First Community to Cope's in the principal amount of $280,000.00. As of February 13, 2002, the
balance of such loan was $238,916.65.
6.01-2
SCHEDULE 6.02
to
ACXIOM CORPORATION
TERM CREDIT AGREEMENT
Existing Liens
1. Liens described in Schedule 6.01
2. Lien against assets and capital stock of Acxiom CDC, Inc. in favor of Trans Union LLC to secure
performance of services (UCC-1 originally filed August 31, 1992; continuation filed March 12, 1997)
3. Liens against assets and capital stock of Acxiom Corporation in favor of Bankers/Softech Division of EAB
Leasing Corp.
Page 6.02 - 1
FIFTH AMENDMENT TO CERTAIN OPERATIVE AGREEMENT
FIFTH amendment to certain operative agreements dated as of February 28, 2002 (this
"Agreement") is by and among ACXIOM CORPORATION, a Delaware corporation (the "Lessee" or the
"Construction Agent"); the various parties hereto from time to time as guarantors (subject to the
definition of Guarantors in Appendix A to the Participation Agreement, individually, a "Guarantor" and
collectively, the "Guarantors"); WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION (formerly First
Security Bank, National Association), a national banking association, not individually, but solely as
the Owner Trustee under the AC Trust 2000-1 (the "Owner Trustee", the "Borrower" or the "Lessor"); WELLS
FARGO BANK NEVADA, NATIONAL ASSOCIATION (formerly First Security Trust Company of Nevada), not
individually, but solely as Trustee under AC Trust 2000-2 (the "Trustee" or the "Series 2000-B Bond
Purchaser"); the various banks and other lending institutions which are parties to the Participation
Agreement from time to time as holders of certificates issued with respect to the AC Trust 2000-1
(subject to the definition of Holders in Appendix A to the Participation Agreement, individually, a
which are parties to the Participation Agreement from time to time as lenders (subject to the definition of
Lenders in Appendix A to the Participation Agreement, individually, a "Lender" and collectively, the
"Lenders"); and BANK OF AMERICA, N.A., a national banking association, as the agent for the Lenders and
respecting the Security Documents, as the agent for the Lenders and the Holders, to the extent of their
interests (in such capacity, the "Agent").
WITNESSETH:
WHEREAS, the parties hereto, are parties to that certain Participation Agreement dated as of
October 24, 2000, (as amended by that certain Waiver and First Amendment to Certain Operative Agreements
dated as of August 14, 2001, the Second Amendment to Certain Operative Agreements dated as of September
14, 2001, the Third Amendment to Certain Operative Agreements dated as of September 21, 2001 and the
Fourth Amendment to Certain Operative Agreements dated as of January 28, 2002 each by and among certain
of the parties hereto and as such may be further amended, modified, extended, supplemented, restated
and/or replaced from time to time, the "Participation Agreement");
WHEREAS, the Lessee has requested that the Lenders and Holders permit the Lessee to incur
Property Costs with respect to the Property located in Phoenix, Arizona;
WHEREAS, the Lessee requests that the Lenders and Holders amend certain restrictions which
limit the Lessee's access to the aggregate Commitments and Holder Commitments; and
WHEREAS, the parties hereto agree to amend the Operative Agreements in accordance with the
terms and conditions set forth herein.
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and valuable consideration, the
receipt and sufficiency of which is acknowledged, the parties hereto agree as follows:
AGREEMENT:
1. Definitions. Capitalized terms used herein and not otherwise defined shall have the
meaning given to such terms in Appendix A to the Participation Agreement and the Rules of Usage set
forth therein shall apply herein.
2. Appendix A to the Participation Agreement. Appendix A to the Participation Agreement
is amended by adding the following definition in the appropriate alphabetical order:
"Fifth Amendment" shall mean that certain Fifth Amendment to Certain Operative Agreements dated
as of February 28, 2002 by and among certain of the parties to the Participation Agreement.
3. Limitation on Requisitions. In addition to the terms and conditions regarding
Requisitions in the Operative Agreements, the Construction Agent agrees that unless otherwise agreed by
the Majority Secured Parties, the Construction Agent shall not submit any Requisition except
Requisitions which (a)(i) request Advances solely with respect to the Property located in Little Rock,
Arkansas or (ii) request Advances solely with respect to the Property located in Phoenix, Arizona,
provided with respect to the Phoenix, Arizona property only, the aggregate of all amounts described in
all Requisitions delivered after February 1, 2002 shall not exceed $250,000.00 and (b) in the aggregate
with all other proposed Requisitions not yet funded and all Requisitions funded on or after August 13,
2001 shall not exceed $25,250,000.00. Until such time as the Agent delivers written notice to the
Lessee which expressly states that each Lender and each Holder (in each Lender's and each Holder's sole
discretion) has agreed to remove the limit on advances set forth in this sentence, no Lender or Holder
shall be obligated to make any Loan or Holder Advance in excess of its pro rata share of $45,750,000.00,
as determined in accordance with its Commitments and Holder Commitments, as applicable.
4. Limited Release of Commitment and Holder Commitment Restrictions. Each Lender and
each Holder party hereto agrees and directs the Agent to and upon the effectiveness of this Agreement,
the Agent shall be deemed to have delivered notice to the Lessee that the restriction in Section 8 of
the First Amendment shall be replaced by the terms and conditions of Section 3 hereof.
5. Conditions Precedent and Conditions Subsequent. Notwithstanding anything contained
herein to the contrary, this Agreement shall not become effective until (a) the Agent has received
executed counterpart signature pages to this Agreement from each Credit Party, the Owner Trustee, the
Trustee each Lender and each Holder, (b) completion and delivery to the Agent of each of the following
in form and substance acceptable to the Agent: (i) a bring-down Secretary's Certificate from each Credit
Party, dated as of the date hereof, (ii) an Officer's Certificate from the Lessee in the form attached
to the Participation Agreement as Exhibit C, dated as of the date hereof, and (iii) all additional
documentation and information as the Agent or its legal counsel, Moore & Van Allen PLLC, may request,
(c) no Default or Event of Default shall have occurred and be continuing and (d) all proceedings taken
in connection with the transactions contemplated by this Agreement and all documentation and other legal
matters incident thereto shall be satisfactory to the Agent and its legal counsel, Moore & Van Allen
PLLC.
2
6. Representations and Warranties. The Lessee hereby represents and warrants that,
except as stated otherwise, as of the date hereof the representations and warranties contained in
Section 6.2 of the Participation Agreement, each of the Incorporated Representations and Warranties and
the representations and warranties in the Loan Documents (as defined in the Lessee Credit Agreement) are
true and accurate as of the date hereof as if made on such date, except to the extent such
representations and warranties relate solely to an earlier date, in which case such representations and
warranties were true and accurate as of such earlier date, (ii) no event or condition exists or would
result from or continue after the consummation of the transactions contemplated hereby, which
constitutes a Default or an Event of Default, (iii) each Operative Agreement to which any Credit Party
is a party remains in full force and effect with respect to it and shall remain in full force and effect
after the effectiveness of this Agreement, and (iv) it knows of no event that would or with the passage
of time or giving of notice or both could constitute a Casualty, Condemnation or Environmental Violation.
7. Release. In consideration of entering into this Agreement, each Credit Party (a)
represents and warrants to each Financing Party that as of the date hereof there are no Claims or
offsets against or defenses or counterclaims to its obligations under the Operative Agreements and
furthermore, such Credit Party waives any and all such Claims, offsets, defenses or counterclaims
whether known or unknown, arising prior to the date of this Agreement and (b) releases each Financing
Party and each of their respective Affiliates, Subsidiaries, officers, employees, representatives,
agents, counsel and directors and each Indemnified Party from any and all actions, causes of action,
Claims, demands, damages and liabilities of whatever kind or nature, in law or in equity, now known or
unknown, suspected or unsuspected to the extent that any of the foregoing arises from any action or
failure to act with respect to this Agreement or any other Operative Agreement, on or prior to the date
hereof.
8. Continued Effectiveness of Operative Agreements. Except as modified hereby, all of
the terms and conditions of the Operative Agreements are hereby ratified and affirmed and shall remain
in full force and effect.
9. Direction to Owner Trustee. The Agent, the Lenders and the Holders hereby instruct
the Owner Trustee to enter into this Agreement and such other documents necessary to effectuate the
intent of this Agreement.
10. Miscellaneous.
(a) Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining provisions hereof,
and any such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
(b) Counterparts. This Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an original, but
all such counterparts shall together constitute but one and the same instrument.
3
(c) Headings. The headings of the various articles and sections of this
Agreement are for convenience of reference only and shall not modify, define, expand or limit
any of the terms or provisions hereof.
(d) Fees and Expenses. The Lessee agrees to pay all reasonable costs and
expenses of the Agent in connection with the preparation, execution and delivery of this
Agreement, including, without limitation, the reasonable fees and expenses of Moore & Van
Allen, PLLC.
(e) Governing Law; Submission to Jurisdiction; Venue. This Agreement and the
rights and obligations of the parties hereunder shall be governed and construed, interpreted
and enforced in accordance with the internal laws of the State of North Carolina. THE
PROVISIONS OF THE PARTICIPATION AGREEMENT RELATING TO SUBMISSION TO JURISDICTION AND VENUE ARE
HEREBY INCORPORATED BY REFERENCE HEREIN, MUTATIS MUTANDIS.
(f) Further Assurances. The provisions of the Participation Agreement relating
to further assurances are hereby incorporated by reference herein, mutatis mutandis.
(g) Survival of Representations and Warranties. All representations and
warranties make in this Agreement or any other Operative Agreement shall survive the execution and
delivery of this Agreement and the other Operative Agreements, and no investigation by any Financing
Party or any closing shall affect the representations and warranties or the right of the Financing
Parties to rely upon them.
4
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their
respective officers thereunto duly authorized as of the date first above written.
CONSTRUCTION AGENT
AND LESSEE: ACXIOM CORPORATION, as the Construction Agent and as the
Lessee
By: /s/ Jerry C. Jones
--------------------------------------
Name: Jerry C. Jones
Title: Business Development/Legal Leader
GUARANTORS: ACXIOM CDC, INC.
ACXIOM/DIRECT MEDIA, INC.
ACXIOM RM-TOOLS, INC.
ACXIOM/MAY & SPEH, INC.
GIS INFORMATION SYSTEMS, INC.
ACXIOM ASIA, LTD.
ACXIOM NJA, INC.
ACXIOM PROPERTY DEVELOPMENT, INC.
ACXIOM/PYRAMID INFORMATION SYSTEMS, INC.
ACXIOM RTC, INC.
ACXIOM SDC, INC.
ACXIOM TRANSPORT SERVICES, INC.
ACXIOM UWS, LTD.
By: /s/ Jerry C. Jones
-----------------------------------------
Name: Jerry C. Jones
Title: Vice President/Assistant Secretary
(signature pages continue)
OWNER TRUSTEE AND
LESSOR: WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION (formerly
First Security Bank, National Association), not
individually, except as expressly stated herein, but solely
as the Owner Trustee under the AC Trust 2000-1
By: /s/ Val T. Orton
----------------------------------
Name: Val T. Orton
Title: Vice President
SERIES 2000-B BOND
PURCHASER: WELLS FARGO BANK NEVADA, NATIONAL
ASSOCIATION (formally known as First Security Trust Company
of Nevada), not individually, except as expressly stated
herein, but solely as the Trustee under the AC Trust 2000-2
By: /s/ Val T. Orton
----------------------------------
Name: Val T. Orton
Title: Trust Officer
(signature pages continue)
AGENT AND LENDERS: BANK OF AMERICA, N.A., as a Lender and
as the Agent
By: /s/ B. Kenneth Burton, Jr.
----------------------------------
Name: B. Kenneth Burton, Jr.
Title: Vice President
(signature pages continue)
ABN-AMRO BANK, N.V., as a Lender
By: /s/ Maria Vickroy-Peralta
----------------------------------
Name: Maria Vickroy-Peralta
Title: Senior Vice President and Head
By: /s/ James A. Redmond
----------------------------------
Name: James Anthony Redmond
Title: Assistant Vice President
(signature pages continue)
THE BANK OF NOVA SCOTIA, as a Lender
By: /s/ Nadine Bell
----------------------------------
Name: Nadine Bell
Title: Senior Manager Loan Operations
(signature pages continue)
WACHOVIA BANK, N.A., as a Lender
By: /s/ Karin E. Reel
----------------------------------
Name: Karin E. Reel
Title: Vice President
(signature pages continue)
SUNTRUST BANK, as a Lender
By: /s/ Leonard L. McKinnon
----------------------------------
Name: Leonard L. McKinnon
Title: Vice President
(signature pages continue)
HOLDERS: BANK OF AMERICA, N.A., as a Holder
By: /s/ B. Kenneth Burton, Jr.
----------------------------------
Name: B. Kenneth Burton, Jr.
Title: Vice President
(signature pages continue)
SCOTIABANC INC., as a Holder
By: /s/ W.J.G. Brown
----------------------------------
Name: W.J.G. Brown
Title: Managing Director
(signature pages continue)
LEASE PLAN NORTH AMERICA, INC., as a Holder
By: /s/ Elizabeth R. McClellan
----------------------------------
Name: Elizabeth R. McClellan
Title: Vice President
(signature pages continue)
WACHOVIA BANK, N.A., as a Holder
By: /s/ Karin E. Reel
----------------------------------
Name: Karin E. Reel
Title: Vice President
(signature pages continue)
SUNTRUST BANK, as a Holder
By: /s/ Leonard L. McKinnon
----------------------------------
Name: Leonard L. McKinnon
Title: Vice President
(signature pages end)
EXHIBIT 10(d)
WAIVER AND SIXTH AMENDMENT TO CERTAIN OPERATIVE AGREEMENTS
WAIVER AND SIXTH amendment to certain operative agreements dated as of May 13, 2002 (this "Agreement")
is by and among ACXIOM CORPORATION, a Delaware corporation (the "Lessee" or the "Construction Agent"); the
various parties hereto from time to time as guarantors (subject to the definition of Guarantors in Appendix A to
the Participation Agreement, individually, a "Guarantor" and collectively, the "Guarantors"); WELLS FARGO BANK
NORTHWEST, NATIONAL ASSOCIATION (formerly First Security Bank, National Association), a national banking
association, not individually, but solely as the Owner Trustee under the AC Trust 2000-1 (the "Owner Trustee",
the "Borrower" or the "Lessor"); WELLS FARGO BANK NEVADA, NATIONAL ASSOCIATION (formerly First Security Trust
Company of Nevada), not individually, but solely as Trustee under AC Trust 2000-2 (the "Trustee" or the "Series
2000-B Bond Purchaser"); the various banks and other lending institutions which are parties to the Participation
Agreement from time to time as holders of certificates issued with respect to the AC Trust 2000-1 (subject to the
definition of Holders in Appendix A to the Participation Agreement, individually, a "Holder" and collectively,
the "Holders"); the various banks and other lending institutions which are parties to the Participation Agreement
from time to time as lenders (subject to the definition of Lenders in Appendix A to the Participation Agreement,
individually, a "Lender" and collectively, the "Lenders"); and BANK OF AMERICA, N.A., a national banking
association, as the agent for the Lenders and respecting the Security Documents, as the agent for the Lenders and
the Holders, to the extent of their interests (in such capacity, the "Agent").
WITNESSETH:
WHEREAS, the parties hereto, are parties to that certain Participation Agreement dated as of October 24,
2000, (as amended by that certain Waiver and First Amendment to Certain Operative Agreements dated as of
August 14, 2001, the Second Amendment to Certain Operative Agreements dated as of September 14, 2001, the Third
Amendment to Certain Operative Agreements dated as of September 21, 2001, the Fourth Amendment to Certain
Operative Agreements dated as of January 28, 2002 and the Fifth Amendment to Certain Operative Agreements dated
as of February 28, 2002 each by and among certain of the parties hereto and as such may be further amended,
modified, extended, supplemented, restated and/or replaced from time to time, the "Participation Agreement");
WHEREAS, the Lessee has advised the Agent, the Lenders and the Holders that certain Defaults and Events
of Default have occurred under Sections 17.1(d), (f) and (l) of the Lease, which such Defaults and Events of
Default pursuant to 17.1(l) of the Lease arose as a result of violations of clauses (c) and (d) of Article VIII
of the Lessee Credit Agreement, as a result of (a) the Lessee guaranteeing the obligations of Kidco Holdings,
Inc. owing to Mercantile Bank of Arkansas National Association (as more fully described in paragraph 2 of
Exhibit A attached hereto), which guaranty obligations constitute Indebtedness (as such term is defined in the
Lessee Credit Agreement) not permitted by Section 6.01 of the Lessee Credit Agreement; (b) the Lessee
guaranteeing the obligations of Cope's Aircraft Services, Inc. owing to First Community Bank (as more fully
described in paragraph 3 of Exhibit A), which guaranty obligations constitute Indebtedness not permitted by
Section 6.01 of the Lessee Credit Agreement; (c) the Lessee granting a Lien on substantially all of its personal
property to Softech Financial in connection with a lease agreement in violation of Section 6.02 of the Lessee
Credit Agreement (as more fully described in paragraph 1 of Exhibit A); (d) the Lessee's inadvertent failure to
disclose at the closing of the Lessee Credit Agreement the existence of the Indebtedness described in paragraphs
2 and 3 of Exhibit A as required by Section 3.04(b) of the Lessee Credit Agreement and Section 6.2(a) of the
Participation Agreement; (e) the Lessee's inadvertent failure to disclose, at the closing of the Lessee Credit
Agreement and on each date thereafter when the Lessee made the representations and warranties pursuant to Section
6.2(a) of the Participation Agreement, the existence of the Lien described in paragraph 1 of Exhibit A as
required by Section 3.05(a) of the Lessee Credit Agreement and Section 6.2(a) of the Participation Agreement and
(f) Lessee's failure to provide notice to the Agent of the Defaults and Events of Default described in (a)-(e) of
this paragraph as required by Section 8.3(o) of the Participation Agreement (the "Existing Defaults" and the
covenants and Incorporated Covenants described in this paragraph, herein the "Violated Covenants"). In
accordance with the Operative Agreements, the Lessee has requested that the Majority Secured Parties waive the
Existing Defaults; and
WHEREAS, the parties hereto agree to amend the Operative Agreements in accordance with the terms and
conditions set forth herein.
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and valuable consideration, the receipt
and sufficiency of which is acknowledged, the parties hereto agree as follows:
AGREEMENT:
1. Definitions. Capitalized terms used herein and not otherwise defined shall have the meaning
given to such terms in Appendix A to the Participation Agreement and the Rules of Usage set forth therein shall
apply herein.
2. Appendix A to the Participation Agreement. Appendix A to the Participation Agreement is
amended by adding the following definitions in the appropriate alphabetical order:
"Intercreditor Second Amendment" shall mean that certain Second Amendment to the Intercreditor
Agreement dated as of May 13, 2002 which amends the Intercreditor Agreement and is by and among the
parties to the Intercreditor Agreement.
"Lessee Credit Agreement First Amendment" shall mean that certain Waiver and First Amendment to
Amended and Restated Credit Agreement dated as of May 13, 2002 by and among the parties to the Lessee
Credit Agreement.
"Sixth Amendment" shall mean that certain Waiver and Sixth Amendment to Certain Operative
Agreements dated as of May 13, 2002 by and among certain of the parties to the Participation Agreement.
3. Incorporation of Representations and Warranties, Covenants and Additional Terms. Pursuant to
Section 28.1 of the Lease, the Majority Secured Parties hereby direct the Agent to consent to the waivers and to
the incorporation of the applicable provisions set forth in the Lessee Credit Agreement First Amendment and the
Agent, at the direction of the Majority Secured Parties, hereby consents to the waiver of the Existing Defaults
2
pursuant to Article III thereof and the incorporation of the amendments to the Incorporated Representations and
Warranties, the Incorporated Covenants and the Additional Incorporated Terms, as applicable, as set forth in the
Lessee Credit Agreement First Amendment substantially in the form attached hereto as Exhibit B.
4. Authority to Execute Intercreditor Second Amendment. Each party hereto that is a "Creditor"
under the Intercreditor Agreement or a Financing Party hereby: (a) consents to and agrees to the Intercreditor
Second Amendment substantially in the form attached hereto as Exhibit C; (b) authorizes and directs the Agent and
the Collateral Agent to execute and deliver the Intercreditor Second Amendment and (c) grants the Agent the
authority to execute the Intercreditor Second Amendment and each other document necessary to effectuate the
provisions of this Agreement and the Intercreditor Second Amendment and such execution by the Agent shall bind
each of the Financing Parties as if each such Financing Party was party to the Intercreditor Second Amendment.
5. Waiver of Defaults. The Lessee has advised the Financing Parties that certain Defaults or
Events of Default have occurred and are continuing pursuant to Sections 17.1(d), (f) and (l) of the Lease as
described above and in Exhibit A attached hereto. Each undersigned Financing Party hereby waives the Existing
Defaults and agrees not to exercise any rights or remedies available as a result of the occurrence thereof;
provided: (a) the Lien, described on Schedule 6.02 to the Lessee Credit Agreement, on the Lessee's or any other
Credit Party's assets in favor of Bankers/Softech Division of EAB Leasing Corp. shall not at any time secure debt
or other obligations in an aggregate amount in excess of $2,000,000; and (b) at no time shall both of the
following have occurred: (i) Bankers/Softech Division of EAB Leasing Corp. or any Affiliate thereof have a
perfected security interest in any collateral or asset of any Credit Party or any Subsidiary of any Credit Party
(other than the property that is leased under the Lessee's lease agreement with EAB Leasing Corp.) and (ii) any
judgment have been rendered against any Credit Party or any Subsidiary of any Credit Party in favor EAB Leasing
Corp. or any of its Affiliates which shall remain undischarged for a period of five (5) or more Business Days
during which execution shall not be effectively stayed, or any action (including without limitation self-help
remedies) shall be legally taken by EAB Leasing Corp. or any of its Affiliates to attach, seize or levy upon any
collateral or assets of any Credit Party or any Subsidiary of any Credit Party (other than the property that is
leased under the Lessee's lease agreement with EAB Leasing Corp.) to enforce or collect the obligations of any
Credit Party or any Subsidiary of any Credit Party. The waiver specifically described in this Section 5 shall
not constitute and shall not be deemed: (y) a waiver of any Default or Event of Default (whether arising as a
result of the further violation of the Violated Covenants, any other covenant, Incorporated Covenant or
otherwise) or a waiver of any rights or remedies arising as a result such other or further Defaults or Event of
Defaults; or (z) a waiver by the Financing Parties of their right to require the Lessee or any other Credit Party
to comply with any of the Violated Covenants at any time other than as described above in the definition of
Existing Defaults. The failure to comply with the Violated Covenants, other than as contemplated by this Section
5, shall constitute a Default or Event of Default, as applicable. The failure of any representation, warranty or
certification made or deemed made by or on behalf of the Lessee or any other Credit Party in connection with any
Operative Agreement shall be false, misleading or inaccurate in any material respect when made or deemed made
shall constitute an Event of Default.
3
6. Conditions Precedent. Notwithstanding anything contained herein to the contrary, this
Agreement shall not become effective until (a) the Agent has received executed counterpart signature pages to
this Agreement from each Credit Party, the Owner Trustee, the Trustee and the Majority Secured Parties, (b) prior
or simultaneous effectiveness of the Lessee Credit Agreement First Amendment, (c) prior or simultaneous
effectiveness of a waiver of the defaults and events of default under the Term Loan, which correspond to the
Existing Defaults, (d) all additional documentation and information as the Agent or its legal counsel, Moore &
Van Allen PLLC, may request, (e) no Default or Event of Default, save the Existing Defaults, shall have occurred
and be continuing and (f) all proceedings taken in connection with the transactions contemplated by this
Agreement and all documentation and other legal matters incident thereto shall be satisfactory to the Agent and
its legal counsel, Moore & Van Allen PLLC.
7. Representations and Warranties. The Lessee hereby represents and warrants that, except as
stated otherwise, as of the date hereof the representations and warranties contained in Section 6.2 of the
Participation Agreement, each of the Incorporated Representations and Warranties and the representations and
warranties in the Loan Documents (as defined in the Lessee Credit Agreement) are true and accurate as of the date
hereof as if made on such date, except to the extent such representations and warranties relate solely to an
earlier date, in which case such representations and warranties were true and accurate as of such earlier date,
(ii) no event or condition exists or would result from or continue after the consummation of the transactions
contemplated hereby, which constitutes a Default or an Event of Default, (iii) each Operative Agreement to which
any Credit Party is a party remains in full force and effect with respect to it and shall remain in full force
and effect after the effectiveness of this Agreement, and (iv) it knows of no event that would or with the
passage of time or giving of notice or both could constitute a Casualty, Condemnation or Environmental Violation.
8. Release. In consideration of entering into this Agreement, each Credit Party (a) represents
and warrants to each Financing Party that as of the date hereof there are no Claims or offsets against or
defenses or counterclaims to its obligations under the Operative Agreements and furthermore, such Credit Party
waives any and all such Claims, offsets, defenses or counterclaims whether known or unknown, arising prior to the
date of this Agreement and (b) releases each Financing Party and each of their respective Affiliates,
Subsidiaries, officers, employees, representatives, agents, counsel and directors and each Indemnified Party from
any and all actions, causes of action, Claims, demands, damages and liabilities of whatever kind or nature, in
law or in equity, now known or unknown, suspected or unsuspected to the extent that any of the foregoing arises
from any action or failure to act with respect to this Agreement or any other Operative Agreement, on or prior to
the date hereof.
9. Continued Effectiveness of Operative Agreements. Except as modified hereby, all of the terms
and conditions of the Operative Agreements are hereby ratified and affirmed and shall remain in full force and
effect.
10. Direction to Owner Trustee. The Agent, the Lenders and the Holders hereby instruct the Owner
Trustee to enter into this Agreement and such other documents necessary to effectuate the intent of this
Agreement.
4
11. Miscellaneous.
(a) Severability. Any provision of this Agreement that is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
(b) Counterparts. This Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original, but all such
counterparts shall together constitute but one and the same instrument.
(c) Headings. The headings of the various articles and sections of this Agreement are for
convenience of reference only and shall not modify, define, expand, limit or otherwise affect any of the
terms or provisions hereof.
(d) Fees and Expenses. The Lessee agrees to pay all reasonable costs and expenses of the
Agent in connection with the preparation, execution and delivery of this Agreement, including, without
limitation, the reasonable fees and expenses of Moore & Van Allen, PLLC.
(e) Governing Law; Submission to Jurisdiction; Venue. This Agreement and the rights and
obligations of the parties hereunder shall be governed and construed, interpreted and enforced in
accordance with the internal laws of the State of North Carolina. THE PROVISIONS OF THE PARTICIPATION
AGREEMENT RELATING TO SUBMISSION TO JURISDICTION AND VENUE ARE HEREBY INCORPORATED BY REFERENCE HEREIN,
MUTATIS MUTANDIS.
(f) Further Assurances. The provisions of the Participation Agreement relating to further
assurances are hereby incorporated by reference herein, mutatis mutandis.
(g) Survival of Representations and Warranties. All representations and warranties make
in this Agreement or any other Operative Agreement shall survive the execution and delivery of this
Agreement and the other Operative Agreements, and no investigation by any Financing Party or any closing
shall affect the representations and warranties or the right of the Financing Parties to rely upon them.
(h) Amendment. This Agreement shall not be terminated, amended, supplemented, waived or
modified except in accordance with Section 12.4 of the Participation Agreement.
5
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their
respective officers thereunto duly authorized as of the date first above written.
CONSTRUCTION AGENT
AND LESSEE: ACXIOM CORPORATION, as the Construction Agent and as the
Lessee
By: /s/ Dathan A. Gaskill
----------------------------------------
Name: Dathan A. Gaskill
Title: Corporate Finance Leader
GUARANTORS: ACXIOM CDC, INC.
ACXIOM/DIRECT MEDIA, INC.
ACXIOM RM-TOOLS, INC.
ACXIOM/MAY & SPEH, INC.
GIS INFORMATION SYSTEMS, INC.
ACXIOM ASIA, LTD.
ACXIOM PROPERTY DEVELOPMENT, INC.
ACXIOM/PYRAMID INFORMATION SYSTEMS, INC.
ACXIOM SDC, INC.
ACXIOM TRANSPORT SERVICES, INC.
ACXIOM UWS, LTD.
By: /s/ Dathan A. Gaskill
----------------------------------------
Name: Dathan A. Gaskill
Title: Vice President, Assistant Treasurer
(signature pages continue)
OWNER TRUSTEE AND
LESSOR: WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION (formerly
First Security Bank, National Association), not
individually, except as expressly stated herein, but solely
as the Owner Trustee under the AC Trust 2000-1
By: /s/ Val T. Orton
----------------------------------------
Name: Val T. Orton
Title: Vice President
SERIES 2000-B BOND
PURCHASER: WELLS FARGO BANK NEVADA, NATIONAL
ASSOCIATION (formally known as First Security Trust Company
of Nevada), not individually, except as expressly stated
herein, but solely as the Trustee under the AC Trust 2000-2
By: /s/ Val T. Orton
----------------------------------------
Name: Val T. Orton
Title: Trust Officer
(signature pages continue)
AGENT AND LENDERS: BANK OF AMERICA, N.A., as a Lender and
as the Agent
By: /s/ B. Kenneth Burton, Jr.
----------------------------------------
Name: B. Kenneth Burton, Jr.
Title: Vice President
(signature pages continue)
ABN-AMRO BANK, N.V., as a Lender
By:
----------------------------------------
Name:
Title:
By:
----------------------------------------
Name:
Title:
(signature pages continue)
THE BANK OF NOVA SCOTIA, as a Lender
By:
----------------------------------------
Name:
Title:
(signature pages continue)
WACHOVIA BANK, N.A., as a Lender
By: /s/ Daniel L. Evans
----------------------------------------
Name: Daniel L. Evans
Title: Managing Director
(signature pages continue)
SUNTRUST BANK, as a Lender
By: /s/ Leaonard L. McKinnon
----------------------------------------
Name: Leonard L. McKinnon
Title: Director
(signature pages continue)
HOLDERS: BANK OF AMERICA, N.A., as a Holder
By: /s/ B. Kenneth Burton, Jr.
----------------------------------------
Name: B. Kenneth Burton, Jr.
Title: Vice President
(signature pages continue)
SCOTIABANC INC. , as a Holder
By:
----------------------------------------
Name:
Title:
(signature pages continue)
LEASE PLAN NORTH AMERICA, INC., as a Holder
By:
----------------------------------------
Name:
Title:
(signature pages continue)
WACHOVIA BANK, N.A., as a Holder
By: /s/ Daniel L. Evans
----------------------------------------
Name: Daniel L. Evans
Title: Managing Director
(signature pages continue)
SUNTRUST BANK, as a Holder
By: /s/ Leonard L. McKinnon
----------------------------------------
Name: Leonard L. McKinnon
Title: Director
(signature pages end)
Exhibit A
Existing Defaults
The Credit Parties verify that:
1. Acxiom Corporation entered into a lease agreement, dated as of September 22, 1999 with Softech Financial
("Softech") pursuant to which Acxiom Corporation granted to Softech a security interest in substantially all of
the personal property of Acxiom Corporation. The debt or other obligations secured by such security interest
does not exceed a maximum amount equal to $2,000,000.
2. Acxiom Corporation entered into that certain Continuing Payment and Performance Guaranty dated as of
October 30, 1998, as amended, pursuant to which Acxiom Corporation unconditionally guaranteed the obligation of
Kidco Holdings, LLC ("Kidco") to make timely payments of the principal amount owed, plus accrued interest, when
the same become due, under that certain Promissory Note, dated as of October 30, 1998, as amended, between
Mercantile Bank of Arkansas National Association, as lender, and Kidco, as borrower, in the principal amount of
$1,184,500.00. As of March 22, 2002, the balance of such loan was $1,138,176.00. It is currently contemplated
that Kidco's obligations under the Promissory Note referenced above will be refinanced at a new financial
institution. Therefore, as a result of such re-financing, each of the above-referenced Payment and Performance
Guarantee and Promissory Note will be restated in its entirety; provided, that the outstanding balance of the
refinanced Promissory Note (and resulting guarantee obligations of Acxiom Corporation) will not exceed in the
aggregate $1,184,500.
3. Acxiom Corporation entered into a guaranty arrangement with First Community Bank ("First Community")
pursuant to which Acxiom Corporation guaranteed the obligation of Cope's Aircraft Services, Inc. ("Cope's") to
make timely payments of the principal amount owed, when the same become due, under a loan arrangement from First
Community to Cope's in the principal amount of $280,000.00. As of February 13, 2002, the balance of such loan
was $238,916.65.
Exhibit B
[Lessee Credit Agreement First Amendment]
Exhibit C
[Intercreditor Second Amendment]
EXHIBIT 10(e)
SEVENTH AMENDMENT TO CERTAIN OPERATIVE AGREEMENTS
SEVENTH amendment to certain operative agreements dated as of October 24, 2002 (this "Agreement") is by and
among ACXIOM CORPORATION, a Delaware corporation (the "Lessee" or the "Construction Agent"); the various parties
hereto from time to time as guarantors (subject to the definition of Guarantors in Appendix A to the Participation
Agreement, individually, a "Guarantor" and collectively, the "Guarantors"); WELLS FARGO BANK NORTHWEST, NATIONAL
ASSOCIATION (formerly First Security Bank, National Association), a national banking association, not individually,
but solely as the Owner Trustee under the AC Trust 2000-1 (the "Owner Trustee", the "Borrower" or the "Lessor");
WELLS FARGO BANK NEVADA, NATIONAL ASSOCIATION (formerly First Security Trust Company of Nevada), not individually,
but solely as Trustee under AC Trust 2000-2 (the "Trustee" or the "Series 2000-B Bond Purchaser"); the various banks
and other lending institutions which are parties to the Participation Agreement from time to time as holders of
certificates issued with respect to the AC Trust 2000-1 (subject to the definition of Holders in Appendix A to the
Participation Agreement, individually, a "Holder" and collectively, the "Holders"); the various banks and other
lending institutions which are parties to the Participation Agreement from time to time as lenders (subject to the
definition of Lenders in Appendix A to the Participation Agreement, individually, a "Lender" and collectively, the
"Lenders"); and BANK OF AMERICA, N.A., a national banking association, as the agent for the Lenders and respecting
the Security Documents, as the agent for the Lenders and the Holders, to the extent of their interests (in such
capacity, the "Agent").
WITNESSETH:
WHEREAS, the parties hereto, are parties to that certain Participation Agreement dated as of October 24,
2000, (as amended by that certain Waiver and First Amendment to Certain Operative Agreements dated as of August 14,
2001, the Second Amendment to Certain Operative Agreements dated as of September 14, 2001, the Third Amendment to
Certain Operative Agreements dated as of September 21, 2001, the Fourth Amendment to Certain Operative Agreements
dated as of January 28, 2002, the Fifth Amendment to Certain Operative Agreements dated as of February 28, 2002 and
the Waiver and Sixth Amendment to Certain Operative Agreements dated as of May 13, 2002 each by and among certain of
the parties hereto and as such may be further amended, modified, extended, supplemented, restated and/or replaced
from time to time, the "Participation Agreement");
WHEREAS, the parties hereto agree to amend the Operative Agreements in accordance with the terms and
conditions set forth herein;
WHEREAS, the Lessee has requested certain modifications to the Participation Agreement, and certain other
Operative Agreements in connection with the Facility to permit funding of additional punch list items with respect
to the Little Rock Property to be completed after the Completion Date for such Property;
WHEREAS, the Lessee anticipates that unless the Operative Agreements are amended, certain Events of Default
will occur on or about October 24, 2002 due to the Construction Agent's failure to construct and complete
construction of the Phoenix Property;
WHEREAS, the Lessee has requested that the Financing Parties amend or grant relief from, for a limited time
period, the covenants and other provisions of the Operative Agreements which are or would be affected by the failure
to construct Improvements on the Phoenix Property; and
WHEREAS, the Financing Parties which are signatories hereto have agreed to the requested modifications on
the terms and conditions set forth herein;
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and valuable consideration, the receipt and
sufficiency of which is acknowledged, the parties hereto agree as follows:
AGREEMENT:
1. Definitions. Capitalized terms used herein and not otherwise defined shall have the meaning given
to such terms in Appendix A to the Participation Agreement and the Rules of Usage set forth therein shall apply
herein.
2. Appendix A to the Participation Agreement. Appendix A to the Participation Agreement is amended by
(a) replacing, in its entirety, the existing definition of "Completion" with the following:
"Completion" shall mean, with respect to a Property, such time as the acquisition, installation,
testing and substantial completion of the Improvements on such Property has been achieved in accordance
with the Plans and Specifications, the Construction Agency Agreement and/or the Lease, and in compliance
with all Legal Requirements and Insurance Requirements and a temporary or permanent certificate of
occupancy, or its equivalent, has been issued with respect to such Property by the appropriate governmental
entity (except if non-compliance, individually or in the aggregate, shall not have and could not reasonably
be expected to have a Material Adverse Effect or if compliance with any of the foregoing is otherwise
waived by the Agent upon instruction from the Majority Secured Parties). If the Lessor purchases a
Property that includes existing Improvements that are to be immediately occupied by the Lessee without any
improvements financed pursuant to the Operative Agreements, the date of Completion for such Property shall
be the Property Closing Date.
and (b) adding the following definition in the appropriate alphabetical order:
"Seventh Amendment" shall mean that certain Seventh Amendment to Certain Operative Agreements dated
as of October 24, 2002 by and among certain of the parties to the Participation Agreement.
3. Little Rock Property Escrow of Final Funding.
(a) Post Completion Date Property Costs. Subject to the satisfaction of all terms and
conditions applicable to Construction Advances set forth in the Operative Agreements, including without
limitation Section 5.4 of the Participation Agreement (other than the requirements of Sections 5.4 (h) and
2
(i) to the extent supporting documentation is not reasonably available on the date when the applicable
Requisition is delivered to the Agent, in which case such Sections 5.4 (h) and (i) shall be satisfied prior
to disbursement of the Escrowed Amount (hereinafter defined) pursuant to Section 3(e) hereof), the
Construction Agent may submit, prior to the Little Rock Property's Completion Date, one (1) additional
Requisition, in an amount not to exceed the lesser of (i) $3,000,000 (ii) the sum of the Available
Commitments and Available Holder Commitments with respect to the Little Rock Property, for Property Costs
for the Little Rock Property for such Advance to be made on or prior to the Little Rock Property's
Completion Date to be held in escrow by the Agent pending disbursement to be made after the Little Rock
Property's Completion Date (the "Escrow Requisition").
(b) Escrowed Amount; Permitted Uses. Provided all applicable conditions have been waived or
met, the sums requested by the Escrow Requisition (the "Escrowed Amount") shall be funded pursuant to the
Operative Agreements on or prior to the Completion Date for the Little Rock Property and subject to the
terms and conditions of the Operative Agreements, except the Escrowed Amount shall be delivered to the
Agent to be held for application pursuant to the Operative Agreements after the Completion Date for the
Little Rock Property. Not more than $1,700,000 from the Escrowed Amount may be used for the Little Rock
Property general contractor retainage and not more than $1,300,000 from the Escrowed Amount may be used for
the final punch list items on the Little Rock Property. The Escrowed Amount shall not be disbursed for any
other purpose other than the foregoing and application pursuant to 3(c) hereof and each disbursement from
the Escrowed Amount shall reduce the Escrowed Amount.
(c) Duration. Notwithstanding Section 5.2(d) of the Participation Agreement, the Escrowed
Amount may be held by the Agent for distribution pursuant to the Operative Agreements to pay for or
reimburse certain Property Costs, subject to this Section 3, with respect to the Little Rock Property until
January 22, 2003. If the entire Escrowed Amount has not been disbursed prior to such date, then the Agent
shall apply the remaining funds in accordance with Section 5.2(d) of the Participation Agreement.
(d) Interest on Escrowed Amount. The Escrowed Amount shall bear interest and Holder Yield, as
applicable, regardless of whether such amount, or any portion thereof, has been disbursed to pay Property
Costs for the Little Rock Property. Lessee agrees to pay Rent with respect to the Escrowed Amount in
accordance with the Operative Agreements.
(e) Disbursements from Escrowed Amount. Each of the terms and conditions of the Operative
Agreements related to Construction Advances shall apply, mutatis mutandis, to disbursements from the
Escrowed Amount even though the Escrowed Amount has been previously advanced to the Agent pursuant to the
Operative Agreements. The Agent shall have no obligation to make disbursements from the Escrowed Amount
unless (i) the terms and conditions applicable to Construction Advances in the Operative Agreements on the
date of each disbursement and the requirements for such disbursement have been satisfied, including,
without limitation, the reassertion by the Credit Parties of the representations and warranties contained
3
in Section 6.2 of the Participation Agreement as of each such disbursement date; provided that terms and
conditions that prohibit disbursement of funds after the Completion Date of a Property shall not be
applicable with respect to the Escrowed Amount, (ii) the remaining Escrowed Amount is greater than or equal
to the amount requested and (iii) no Default or Event of Default has occurred and is continuing. The Agent
shall determine, in its reasonable discretion, whether the Construction Advance requirements regarding each
disbursement from the Escrowed Amount have been sufficiently met.
(f) Termination of Commitments. The Commitments and Holder Commitments with respect to the
Little Rock Property shall terminate on the Completion Date for the Little Rock Property regardless of the
Escrowed Amount.
4. Certificate of Occupancy Covenant. The following is added to the Participation Agreement after the
last provision of Section 8.3:
(w) On or before January 22, 2003 the Lessee shall cause (i) a permanent certificate of occupancy
to be issued with respect to the Little Rock Property and (ii) all punch list items regarding the Little
Rock Property to have been completed in accordance with the terms and conditions of the Operative
Agreements.
5. No Construction Regarding Phoenix Property. Provided the Rent Commencement Dates, with respect to
the Little Rock Property and the Phoenix Property, have occurred on or before the date hereof, including without
limitation the delivery of the Officer's Certificates pursuant to Section 5.5 of the Participation Agreement with
respect to each Property, the parties hereto agree that as of the date hereof and until April 24, 2003:
(a) subsection (ii) of the definition of Permitted Facility shall be deemed to be replaced with
"(ii) a parcel of Land without Improvements, except certain grading and street improvements, located in
Phoenix, Arizona,";
(b) failure to construct Improvements on the Phoenix Property in accordance with the Plans and
Specifications (prior to the changes referenced in subsection (e) hereof) shall not constitute a
Construction Failure pursuant to Section 2.1 of the Agency Agreement;
(c) failure to complete all punch list items as required by Section 2.6(d) of the Agency Agreement
prior to the Completion Dates with respect to the Phoenix Property and the Little Rock Property shall not
constitute a violation of the covenant in Section 2.6(d) of the Agency Agreement (and no Event of Default
shall result therefrom), provided the Lessee complies with Section 8.3(w) of the Participation Agreement;
(d) the Construction Budget, with respect to the Phoenix Property, is deemed to be equal to the
Property Cost of the Phoenix Property as of the date hereof; and
(e) the Plans and Specifications, with respect to the Phoenix Property, are deemed to be amended as
of the date hereof to indicate that the Phoenix Property shall consist of Land without Improvements, except
the Improvements existing as of the date hereof, if any.
4
6. Conditions Precedent. Notwithstanding anything contained herein to the contrary, this Agreement
shall not become effective until (a) the Agent has received executed counterpart signature pages to this Agreement
from each Credit Party, the Owner Trustee, the Trustee and the Majority Secured Parties, (b) all additional
documentation and information as the Agent or its legal counsel, Moore & Van Allen PLLC, may reasonably request, (c)
no Default or Event of Default shall have occurred and be continuing and (d) all proceedings taken in connection
with the transactions contemplated by this Agreement and all documentation and other legal matters incident thereto
shall be reasonably satisfactory to the Agent.
7. Representations and Warranties. The Lessee hereby represents and warrants that, except as stated
otherwise, as of the date hereof the representations and warranties contained in Section 6.2 of the Participation
Agreement, each of the Incorporated Representations and Warranties and the representations and warranties in the
Loan Documents (as defined in the Lessee Credit Agreement) are true and accurate as of the date hereof as if made
on such date, except to the extent such representations and warranties relate solely to an earlier date, in which
case such representations and warranties were true and accurate as of such earlier date, (ii) no event or condition
exists or would result from or continue after the consummation of the transactions contemplated hereby, which
constitutes a Default or an Event of Default, (iii) each Operative Agreement to which any Credit Party is a party
remains in full force and effect with respect to it and shall remain in full force and effect after the
effectiveness of this Agreement, and (iv) it knows of no event that would or with the passage of time or giving of
notice or both could constitute a Casualty, Condemnation or Environmental Violation.
8. Release. In consideration of entering into this Agreement, each Credit Party (a) represents and
warrants to each Financing Party that as of the date hereof there are no Claims or offsets against or defenses or
counterclaims to its obligations under the Operative Agreements and furthermore, such Credit Party waives any and
all such Claims, offsets, defenses or counterclaims whether known or unknown, arising prior to the date of this
Agreement and (b) releases each Financing Party and each of their respective Affiliates, Subsidiaries, officers,
employees, representatives, agents, counsel and directors and each Indemnified Party from any and all actions,
causes of action, Claims, demands, damages and liabilities of whatever kind or nature, in law or in equity, now
known or unknown, suspected or unsuspected to the extent that any of the foregoing arises from any action or failure
to act with respect to this Agreement or any other Operative Agreement, on or prior to the date hereof.
9. Continued Effectiveness of Operative Agreements. Except as modified hereby, all of the terms and
conditions of the Operative Agreements are hereby ratified and affirmed and shall remain in full force and effect.
10. Direction to Owner Trustee. The Agent, the Lenders and the Holders hereby instruct the Owner
Trustee to enter into this Agreement and such other documents necessary to effectuate the intent of this Agreement.
5
11. Miscellaneous.
(a) Severability. Any provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
(b) Counterparts. This Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original, but all such counterparts
shall together constitute but one and the same instrument.
(c) Headings. The headings of the various articles and sections of this Agreement are for
convenience of reference only and shall not modify, define, expand, limit or otherwise affect any of the
terms or provisions hereof.
(d) Fees and Expenses. The Lessee agrees to pay all reasonable costs and expenses of the
Agent in connection with the preparation, execution and delivery of this Agreement, including, without
limitation, the reasonable fees and expenses of Moore & Van Allen, PLLC.
(e) Governing Law; Submission to Jurisdiction; Venue. This Agreement and the rights and
obligations of the parties hereunder shall be governed and construed, interpreted and enforced in
accordance with the internal laws of the State of North Carolina. THE PROVISIONS OF THE PARTICIPATION
AGREEMENT RELATING TO SUBMISSION TO JURISDICTION AND VENUE ARE HEREBY INCORPORATED BY REFERENCE HEREIN,
MUTATIS MUTANDIS.
(f) Further Assurances. The provisions of the Participation Agreement relating to further
assurances are hereby incorporated by reference herein, mutatis mutandis.
(g) Survival of Representations and Warranties. All representations and warranties make in
this Agreement or any other Operative Agreement shall survive the execution and delivery of this Agreement
and the other Operative Agreements, and no investigation by any Financing Party or any closing shall affect
the representations and warranties or the right of the Financing Parties to rely upon them.
(h) Amendment. This Agreement shall not be terminated, amended, supplemented, waived or
modified except in accordance with Section 12.4 of the Participation Agreement.
6
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective
officers thereunto duly authorized as of the date first above written.
CONSTRUCTION AGENT
AND LESSEE: ACXIOM CORPORATION, as the Construction Agent and as the Lessee
By: /s/ Dathan A. Gaskill
------------------------------------------
Name: Dathan A. Gaskill
Title: Corporate Finance Leader
GUARANTORS: ACXIOM CDC, INC.
ACXIOM/DIRECT MEDIA, INC.
ACXIOM RM-TOOLS, INC.
ACXIOM/MAY & SPEH, INC.
GIS INFORMATION SYSTEMS, INC.
ACXIOM ASIA, LTD.
ACXIOM PROPERTY DEVELOPMENT, INC.
ACXIOM/PYRAMID INFORMATION SYSTEMS, INC.
ACXIOM SDC, INC.
ACXIOM TRANSPORT SERVICES, INC.
ACXIOM UWS, LTD.
ACXIOM INFORMATION SECURITY SERVICES, INC.
By: /s/ Dathan A. Gaskill
------------------------------------------
Name: Dathan A. Gaskill
Title: Vice President, Assistant Treasurer
(signature pages continue)
OWNER TRUSTEE AND
LESSOR: WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION (formerly
First Security Bank, National Association), not individually,
except as expressly stated herein, but solely as the Owner
Trustee under the AC Trust 2000-1
By: /s/ Val T. Orton
------------------------------------------
Name: Val T. Orton
Title: Vice President
SERIES 2000-B BOND
PURCHASER: WELLS FARGO BANK NEVADA, NATIONAL
ASSOCIATION (formally known as First Security Trust Company of
Nevada), not individually, except as expressly stated herein,
but solely as the Trustee under the AC Trust 2000-2
By: /s/ Val T. Orton
------------------------------------------
Name: Val T. Orton
Title: Trust Officer
(signature pages continue)
AGENT AND LENDERS: BANK OF AMERICA, N.A., as a Lender and
as the Agent
By: /s/ B. Kenneth Burton, Jr.
------------------------------------------
Name: B. Kenneth Burton, Jr.
Title: Vice President
(signature pages continue)
ABN-AMRO BANK, N.V., as a Lender
By: /s/ Elizabeth R. McClellan
------------------------------------------
Name: Elizabeth R. McClellan
Title: Vice President
By: /s/ Blake J. Lacher
------------------------------------------
Name: Blake J. Lacher
Title: Vice President
(signature pages continue)
THE BANK OF NOVA SCOTIA, as a Lender
By: /s/ Liz Hanson
------------------------------------------
Name: Liz Hanson
Title: Director
(signature pages continue)
WACHOVIA BANK, N.A., as a Lender
By: /s/ Karin E. Samuel
------------------------------------------
Name: Karin E. Samuel
Title: Vice President
(signature pages continue)
SUNTRUST BANK, as a Lender
By: /s/ Bryan W. Ford
------------------------------------------
Name: Bryan W. Ford
Title: Dirctor
(signature pages continue)
HOLDERS: BANK OF AMERICA, N.A., as a Holder
By: B. Kenneth Burton
------------------------------------------
Name: B. Kenneth Burton
Title: Vice President
(signature pages continue)
SCOTIABANC INC., as a Holder
By: /s/ William E. Zarrett
------------------------------------------
Name: William E. Zarrett
Title: Managing Director
(signature pages continue)
LEASE PLAN NORTH AMERICA, INC., as a Holder
By: /s/ Elizabeth R. McClellan
------------------------------------------
Name: Elizabeth R. McClellan
Title: Vice President
(signature pages continue)
WACHOVIA BANK, N.A., as a Holder
By: /s/ Karin E. Samuel
------------------------------------------
Name: Karin E. Samuel
Title: Vice President
(signature pages continue)
SUNTRUST BANK, as a Holder
By: /s/ Bryan W. Ford
------------------------------------------
Name: Bryan W. Ford
Title: Director
(signature pages end)
Exhibit 99.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the accompanying Quarterly Report of Acxiom Corporation (the Company) on
Form 10-Q for the period ending September 30, 2002 as filed with the Securities and Exchange
Commission on the date hereof (the Report), I, Charles D. Morgan, Company Leader (principal
executive officer) of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant
to § 906 of the Sarbanes-Oxley Act of 2002, to my knowledge, that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of
the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and result of operations of the Company.
/s/ Charles D. Morgan
---------------------------------------
Charles D. Morgan
Company Leader
(principal executive officer)
November 8, 2002
Exhibit 99.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the accompanying Quarterly Report of Acxiom Corporation (the Company) on Form 10-Q for the
period ending September 30, 2002 as filed with the Securities and Exchange Commission on the date hereof (the
Report), I, Jefferson D. Stalnaker, Financial Operations Leader (principal financial officer) of the Company,
certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, to my
knowledge, that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities
Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial
condition and result of operations of the Company.
/s/ Jefferson D. Stalnaker
-----------------------------------------
Jefferson D. Stalnaker
Company Financial Operations Leader
(principal financial officer)
November 8, 2002